How to regulate intellectual property (IP) rights in body leases?

IP risk in body leasing

In the body leasing model, IT specialists (contractors) create software or other works for a client, but formally they are often not the client’s employees. This raises the question of who owns the copyright to the results of their work. According to the general principles of copyright law, the creator (i.e. the specialist) holds the original copyright to the created work. If the issue of transferring these rights to the client is not clearly and precisely regulated in the contract, the client may have serious problems with the legal use of the software created for him in the future.

The need to regulate in the contract

To avoid any doubts and safeguard the interests of the client, the issue of transfer of IP rights must be clearly and specifically regulated in the body leasing contract (or in a separate IP agreement). The absence of such provisions or their imprecise formulation poses serious legal and business risks for the client.

Key elements of IP records

IP contractual provisions should include, at a minimum:

• Confirmation of transfer of rights: A clear statement that all property copyrights in works (code, documentation, etc.) produced by the contractor as part of the contract passes to the client.
• Moment of transfer of rights: Precise definition of the moment when the transfer of rights takes place (e.g., upon payment of remuneration for a given stage of work, upon acceptance of the work).
• Fields of exploitation: A detailed listing of the fields of exploitation in which the customer acquires copyright (e.g., the right to reproduce, modify, distribute, sublicense). The broader the fields of exploitation, the greater the customer’s freedom to use the software.
• Territory and time: Determination of the territory in which the transfer of rights is valid (usually the whole world) and the time (usually indefinitely).
• Remuneration for the transfer of rights: Indicate that the remuneration for the transfer of copyrights is included in the remuneration for the provision of services or specify a separate remuneration for this (which is less common).
• Subsidiary rights: Regulate the rights to modify the work and exercise dependent rights.
• Supplier commitment: A provision that obligates a body leasing provider to ensure that it has appropriate agreements with its specialists (contractors) to guarantee that they effectively transfer copyright first to the provider and then to the end customer.

B2B cooperation vs. IP

Special attention should be paid to the situation when the contractor works with the supplier on the basis of a B2B contract. In such a case, it is crucial that the B2B contract between the supplier and the specialist contain appropriate provisions for the transfer of economic copyrights to the supplier, which will enable him to further transfer them to the customer.

Summary

Precise and comprehensive regulation of intellectual property rights in a body leasing contract is absolutely essential for the customer’s legal and business security. It provides him with the full right to use and develop the software created on his order by external specialists. Neglecting this aspect can lead to serious complications in the future.