Know-how and and skills learned

[TheCyclingProgrammer]

My standard MSA, based on an IPSE contract contains the following clauses, which I've never had disputed by a client in 7 years of using the contract:

4. Copyright and Intellectual Property Rights
4.1. ‘Deliverable’ means a work produced by the Consultancy in the course of Services for delivery to the Client. Where pre-existing works are incorporated in any Deliverable, the Client has non-exclusive irrevocable world-wide royalty free license to use modify and distribute such pre- existing works, but only as part of the Deliverable; all other rights in the pre-existing works are reserved. Subject thereto, all rights in any Deliverable pass to the Client upon payment of all fees due to the Consultancy which relate to that Deliverable, and the Consultancy will execute a formal assignment thereof on request by the Client.

4.2. The Consultancy will indemnify the Client against infringement of third party rights by a Deliverable, provided that the Client notifies the Consultancy of any relevant third party rights promptly on such rights becoming known to or suspected by the Client.

4.3. Nothing shall prevent the Consultancy from using techniques, ideas, and other know-how gained during the performance of Services under this Agreement in the furtherance of its own business, to the extent that such does not result in disclosure or abuse of confidential information in breach hereof, or any infringement of any Intellectual Property Rights of the Client.

Elsewhere in the contract is a further clause on confidentiality, though this is sometimes superseded by NDAs which I agree to sign from time to time (but only after agreeing to a contract).

Contract is only for two weeks but could lead to something longer term. The client is concerned with clause 4.1 and wants me to remove 4.3 entirely.

Their concern with 4.1 is that they would not have ownership of anything I've produced for them. This is not my interpretation and I've mentioned to them that I have actually signed a formal assignment for a client in the past when requested and would have no problem doing this now.

Their concern with 4.3 is that it is too broad and would, effectively, mean I could reverse-engineer or recreate their technology without directly copying. Personally, I can't see how I could do this without violating confidentiality or infringing on the client's IP and it seems important to me that if I learn new techniques or technologies or improve my existing skills as a result of working on a project (who doesn't?) that I am able to apply what I've learned in the furtherance of my own business of software development.

Any thoughts on how to proceed here? The client is otherwise happy with the rest of the contract but has offered an alternative contract which I'd prefer not to use as it would come under US jurisdiction (insurance issues), would need thoroughly reviewing and probably isn't IR35 friendly. They've pointed me towards their own contract terms on IP rights and its pages long - I can just about make head or tail of it but I wouldn't sign it without having it reviewed legally.

[LondonManc]

Sounds like you've near enough got 4.1 covered off as per your third paragraph. For 4.3, consider adding

4.4 Nothing in clause 4.3 should be interpreted as permission for the consultant to carry out the reverse-engineering or complete recreation elsewhere of solutions provided for the client.

It keeps 4.3 intact but makes 4.4 specific and throwaway for this client (and other fussy future clients.

[Lance]

4.3. Nothing shall prevent the Consultancy from using techniques, ideas, and other know-how gained during the performance of Services under this Agreement in the furtherance of its own business,

to the extent that such does not result in disclosure or abuse of confidential information in breach hereof, or any infringement of any Intellectual Property Rights of the Client.

I've split that into 2 bits. The first is allowing you something and presumably what they don;t like.
The second bit is protecting them from abuse of the first bit.
Given that "techniques, ideas, and other know-how" are not their IP if not a deliverable, then the clause is actually protecting the client.

On that basis I'd say it makes no odds, but the client's contract manager is an idiot.

[SueEllen]

Their concern with 4.1 is that they would not have ownership of anything I've produced for them. This is not my interpretation and I've mentioned to them that I have actually signed a formal assignment for a client in the past when requested and would have no problem doing this now.

This is actually protecting them from using stuff you have built without the relevant licences as it's not always easy to work out which part is original and which part comes under another licence varying from Open Source Licences e.g. Apache Software Foundation, Creative Commons to a proprietary licence.

They don't want to find 4 years down the line when what they are using is a crucial part of the system find they are getting a cease and desist letter from a larger organisation with lawyers to fight them.

Their concern with 4.3 is that it is too broad and would, effectively, mean I could reverse-engineer or recreate their technology without directly copying.

We are in the EU not the US and unless you are doing something completely original, which is unlikely unless it is R&D, that ideas, know-how and techniques aren't patentable. link

Add a clause 4.4 as LondonManc stated.

[TheCyclingProgrammer]

This is actually protecting them from using stuff you have built without the relevant licences as it's not always easy to work out which part is original and which part comes under another licence varying from Open Source Licences e.g. Apache Software Foundation, Creative Commons to a proprietary licence.

They don't want to find 4 years down the line when what they are using is a crucial part of the system find they are getting a cease and desist letter from a larger organisation with lawyers to fight them.

Yup, this was always my understanding of 4.1. I can sign away ownership and rights to any original work created for them but not any open source software that I use as part of a project (though as a rule I only use permissively licensed software). It also enables me to use any library code of my own which I maintain but have not necessarily released as open-source (which is rare, if something is good enough I normally open source my stuff anyway).

However they have indicated that they would prefer not to have to go down the route of a separate letter of assignment. I'm not sure why they are interpreting 4.1 as not giving them ownership over anything original I deliver for them.

We are in the EU not the US and unless you are doing something completely original, which is unlikely unless it is R&D, that ideas, know-how and techniques aren't patentable. link

Add a clause 4.4 as LondonManc stated.

Yes, perhaps this is a culture thing as the client is US based. As well as concerns over reverse engineering, they have also stated "you could apply the same know-how and skills to an engagement with a direct competitor, or even use the know-how and skill learned here to market to a direct competitor that expertise.".

Well yes, I suppose I could, if I happen to do some work for some unknown competitor in the future for them. But again, it seems to me that I would be very limited in what I could do for a competitor without infringing on any confidentiality clauses with this client. I would certainly have knowledge of the problem domain which would be helpful but I don't see why I should be prevented from using *that*.

Admittedly what my client is doing isn't very common (right now anyway) but it strikes me that this is no different to Client A saying "build me an e-commerce system" and then having Client B saying the same thing and me being able to apply any lessons or knowledge I learned from building one for Client A.

[SueEllen]

Yup, this was always my understanding of 4.1. I can sign away ownership and rights to any original work created for them but not any open source software that I use as part of a project (though as a rule I only use permissively licensed software). It also enables me to use any library code of my own which I maintain but have not necessarily released as open-source (which is rare, if something is good enough I normally open source my stuff anyway).

However they have indicated that they would prefer not to have to go down the route of a separate letter of assignment. I'm not sure why they are interpreting 4.1 as not giving them ownership over anything original I deliver for them.

Is it possible not to use your own library of code to do this work e.g. use an alternative permissive open source library? If so point out what I said before and say you will happily mark all files that come from other sources with the correct licences at the top of the files. Then alter the clause in some way to reflect this e.g. they can use licence holders works as the licence holder has directed.

Yes, perhaps this is a culture thing as the client is US based. As well as concerns over reverse engineering, they have also stated "you could apply the same know-how and skills to an engagement with a direct competitor, or even use the know-how and skill learned here to market to a direct competitor that expertise.".

Well yes, I suppose I could, if I happen to do some work for some unknown competitor in the future for them. But again, it seems to me that I would be very limited in what I could do for a competitor without infringing on any confidentiality clauses with this client. I would certainly have knowledge of the problem domain which would be helpful but I don't see why I should be prevented from using *that*.

Admittedly what my client is doing isn't very common (right now anyway) but it strikes me that this is no different to Client A saying "build me an e-commerce system" and then having Client B saying the same thing and me being able to apply any lessons or knowledge I learned from building one for Client A.

They are effectively trying to put a restraint of trade on you above the confidentiality clauses you have agreed to.

Since you haven't got a solicitor/barrister to review the contract you could agree to the clause and ignore it because it is simply not possible for you to work without using the experience which includes all the above you have gained from previous contracts. Your skills may be niche to them but clearly there are others in the European marketplace who have the same skills as you.

[TheCyclingProgrammer]

Well I've proposed the additional clause as suggested and reiterated that I'm happy to sign a formal assignment of IP and will see what happens.

All I really want is another 4-6 weeks of work to tide me over until Christmas and meet my profit target for the year so shall keep looking.

[WordIsBond]

You could always just drop 4.3 entirely. How many "techniques, know-hows, and other ideas" are you going to pick up in 2-3 weeks, and how are they going to know if you use them again later, and how are they going to prove that you got it from them, and how are they going to prove that they aren't engaging in unlawful restraint of trade by trying to prohibit you from using something that is not really their property? 4.3 protects against something that probably needs no protection ever and is even less likely to be needed on such a short term contract. I'm not saying drop it from your standard contract, but you could probably do without it for this client.

You could modify 4.1 to say, "Nothing in this paragraph shall be construed as to limit the Client's rights to those portions of the deliverable which are not pre-existing works."

You might also add a paragraph defining "pre-existing works". If they realise it is referring to libraries, etc, which have been written in the past and you can't give them ownership but you can give them rights, maybe they'll calm down.

You definitely don't want an American contract if it can be avoided.

[jmo21]

You could always just drop 4.3 entirely. How many "techniques, know-hows, and other ideas" are you going to pick up in 2-3 weeks, and how are they going to know if you use them again later, and how are they going to prove that you got it from them, and how are they going to prove that they aren't engaging in unlawful restraint of trade by trying to prohibit you from using something that is not really their property? 4.3 protects against something that probably needs no protection ever and is even less likely to be needed on such a short term contract. I'm not saying drop it from your standard contract, but you could probably do without it for this client.

You could modify 4.1 to say, "Nothing in this paragraph shall be construed as to limit the Client's rights to those portions of the deliverable which are not pre-existing works."

You might also add a paragraph defining "pre-existing works". If they realise it is referring to libraries, etc, which have been written in the past and you can't give them ownership but you can give them rights, maybe they'll calm down.

You definitely don't want an American contract if it can be avoided.

This. Seems unnecessary.