Intellectual Property

Intellectual property (IP) means creations and information protected by legal rights, including copyright, patents, trademarks and licences. CanadaBuys buyer guidance describes it in procurement planning as anything resulting from a contract that can be copyrighted, trademarked, patented or licensed. See the CanadaBuys guidance on intellectual property and copyright.

IP becomes a contract issue whenever a procurement produces or uses software, technical data, reports, designs, inventions, documentation, databases or other protected material. Canadian government contracts separate IP into two groups: background IP, which existed before the contract or was developed independently of it, and foreground IP, which is created in performing the contract. The solicitation and the resulting contract decide who owns each group and what rights the other party receives.

Background IP and foreground IP

The split between background and foreground information drives most IP clauses in federal contracts. Background IP is what a supplier brings to the work, such as existing software, tools, methods or documentation. Foreground IP is what the supplier produces under the contract, such as custom code, reports, drawings or new inventions.

Related terms you will see in solicitations include:

• Background information and foreground information
• IP rights (IPR)
• Copyright, patent and licence
• Ownership or title
• Government-purpose rights
• Third-party infringement

Who owns IP under Government of Canada contracts

The CanadaBuys guidance for federal contracting authorities states that Canada's default position is generally to let contractors keep the IP generated under government contracts, which supports private-sector commercialization. The client department must work out what IP is expected, how it will be handled, and how it will be identified and secured for the client and Canada. Any exception to the default must be identified, and the solicitation must be clear about ownership. The full guidance is on the CanadaBuys buyer's guide.

The guidance sets out general options by type of procurement:

• Research and development: the contractor owns the IP by default, with Canada owning it as an alternative.
• Goods with associated research and development: the contractor owns the IP by default, with Canada owning it as an alternative.
• Goods with no expected research and development: Canada owns the copyright by default, with the contractor owning all IP, including copyright, as an alternative.
• Services with no expected research and development: Canada owns the copyright by default, with the contractor owning all IP, including copyright, as an alternative.

These are planning options, not an automatic rule. The solicitation and the contract determine the rights that apply.

Standard federal IP clauses and infringement warranties

Public Services and Procurement Canada maintains the Standard Acquisition Clauses and Conditions Manual. Its K-series covers intellectual property, including clauses on ownership, licences, background information, foreground information and help with patent or copyright registration. Review the K-series of the manual for the clause text.

One federal clause provides that all IP rights in foreground information vest in Canada as soon as they come into existence, and the contractor has no rights except those Canada grants in writing. Another requires the contractor to grant Canada a non-exclusive, perpetual, irrevocable, worldwide, fully paid and royalty-free licence to specified background IP that is incorporated into the work or needed for Canada to use its rights in the foreground IP. Examples of this wording appear in Employment and Social Development Canada's IP clauses and its background IP licence clause.

The federal ProServices supply arrangement adds infringement terms. The contractor represents and warrants, to the best of its knowledge, that neither it nor Canada will infringe third-party IP rights in performing or using the work, and that Canada will owe no royalties in connection with the work. Where third-party equipment or software is alleged to infringe, the supplier can be required to defend the contractor and Canada and to pay the resulting costs, damages and legal fees.

IP terms in NATO contracts

Canadian suppliers bidding directly to NATO, or supporting NATO-related work, face a different default. Under NATO's general procurement terms, rights in results produced for NATO vest in and become the exclusive property of NATO. This covers technical data, reports, drawings, software, databases and documentation. The exception applies when the supplier identifies pre-existing third-party or supplier rights before accepting the purchase order.

The NCIA general terms and conditions also distinguish purchaser background IP from newly created results. The supplier can receive a limited licence to use purchaser background IP to perform the contract, while NATO can acquire ownership or broad rights in new deliverables.

What intellectual property means for a supplier bidding on Canadian public contracts

Read the IP clauses before you price or design a solution. The solicitation should state who owns foreground IP, and the incorporated standard clauses show what licence Canada receives to your background IP. If your offer relies on existing software or methods, identify them as background IP and understand the licence Canada will expect. Confirm that your solution does not infringe third-party rights, since federal terms can require you to defend Canada against infringement claims. On NATO work, declare pre-existing supplier rights before the purchase order is accepted.