Why Intellectual Property (IP) Matters in Commercial Contracts

When we think about contracts, we often focus on the deliverables.

We look at who needs to do what for whom, in what way and when; and the financials—who pays what, when, and how.

All of that matters, but IP is another area that can be just as important, and one which is too often overlooked.

However, in many modern businesses the real lasting, recurring value isn’t just in the money or the deliverables –it’s in the IP which encompasses copyright, trade marks, patents, design rights and trade secrets.

In the past, businesses were valued by their physical assets –buildings, machines, inventory. Today, intangible assets like software, branding, data, and know-how often make up the bulk of a company’s value.

IP is the legal wrapper around those assets. Without it, you don’t own what you think you own and, perhaps more importantly, you lack the legal tools to stop someone else from using (or abusing) what you think you own.

A contract can decide whether you keep that value or accidentally give it away.

Thinking about why this matters for Green Freeports where there may be increased international collaboration, different jurisdictions will have different rules.

IP is territorial. A trademark registered in the UK doesn’t protect you in the US. A patent in Europe’s jurisdictions doesn’t cover use of that protected method or technology in Asia.

Contracts need to reflect this. If you’re operating internationally, or dealing with international partners, your IP strategy must be global too.

This is where a sensible contract gives all parties a framework to refer to in the event of an uncertainty and reduces the risk of disputes. Particularly where you might be looking to work with a business you haven’t before, a good contract helps to foster reassurance and help the partnership to get off on a strong footing.

Whether it’s a widget, a logo, a piece of code, a set of manufacturing instructions or a secret recipe, make sure your contracts ask the right IP questions. Being clear on ownership and watching for the pitfalls, you can make sure your contracts protect your IP and support your long-term business strategy.

The increasing use of AI by businesses also shines a spotlight on IP and raises questions about who owns AI generated content and the importance of knowing how to avoid inadvertently using someone else’s materials. It’s a fluid area at the moment with the EU currently looking at legislation. The UK Government has spoken about legislation but it doesn’t look like it is on the agenda for this year.

My advice in the meantime is to think about how you interact with an AI engine – have clear objectives and think carefully about how you phrase your prompts, and ensure that you understand its terms and conditions before you use it.

Angus MacLeod, Head of Inverness Office agm@wjm.co.uk

This article first appeared in The Herald