Intellectual Property (IP) Foreground vs. Background

In Canadian public procurement, foreground IP is intellectual property created as part of the work under a Crown procurement contract. Background IP is everything else: IP that existed independently of the contract, whether the Crown or the contractor owns it. The split tells a buyer and a supplier what is new, what is pre-existing, and who controls each.

The distinction is used to decide what IP the contract creates, what IP each party already owns or controls, which party owns the resulting IP, and what licences are needed to use pre-existing IP built into the deliverables. Suppliers meet it in solicitations and contract clauses for defence, marine, professional services, training, research and information technology requirements.

How the Policy Defines Foreground and Background IP

The definitions come from the Treasury Board Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts and its implementation guide. Foreground IP is IP first conceived, developed, produced or reduced to practice as part of work under a Crown procurement contract. Background IP is all IP that is not foreground IP, including IP owned by the Crown or by the contractor.

The IP covered can include patents, copyright, industrial designs, integrated-circuit topographies, plant breeders' rights, trade secrets and confidential information. As a general rule, the policy is intended to support contractor ownership and commercialization of contractor-developed foreground IP.

Ownership of Foreground IP in Federal Contracts

Federal solicitations use Standard Acquisition Clauses and Conditions (SACC) that deal with foreground and background information. Depending on the requirement, the clauses provide for contractor ownership of foreground IP, Canada's ownership of foreground IP, or specified licences for Canada.

Public Services and Procurement Canada (PSPC) states that its defence and marine IP strategy starts from a default position of contractor ownership of foreground information. It also sets mandatory government requirements for both background and foreground information, adapted to the risk and complexity of the procurement and the nature of the asset being acquired.

Where Canada owns foreground IP, SACC material states that the rights belong to Canada when they come into existence, subject to any rights expressly granted to the contractor. The SACC manual includes clauses of this kind, along with rights for Canada in necessary background information.

Licences That Attach to Background IP

Under a contractor-ownership model, the supplemental conditions for contractor IP rights in foreground information give Canada a licence to use the foreground IP for governmental purposes. Canada also receives a licence to use background IP where reasonably necessary to use the deliverables or the foreground IP.

A supplier that keeps ownership of its background IP therefore still grants the buyer the rights it needs to use what it has bought.

Examples From ProServices, Defence and NATO

Canada's ProServices supply arrangement identifies supplemental condition 4007, "Canada to own intellectual property rights in Foreground Information", for certain government-owned training requirements under Stream 15. A CanadaBuys solicitation example shows a defence-specific IP clause for requirements that are defence contracts under the Defence Production Act, and separately provides for Canada ownership where the client department has made that determination.

NATO uses the same general distinction, though the terms depend on the solicitation or contract. The NATO ACT general terms and conditions describe pre-existing IP as remaining the property of the party that owns it, and define foreground IP as IP rights in deliverables generated during contract performance. Rights in contract results may vest in NATO, subject to the contract's stated conditions.

What It Means for a Supplier

CanadaBuys instructs buyers to identify, before issuing a solicitation or awarding a contract, both the IP that exists before award and the IP expected to be generated under the contract. Bid teams should do the same work on their side.

• Identify the pre-existing IP your solution relies on and describe or disclose it where the solicitation requires.
• State any third-party or supplier restrictions on that background IP.
• Read the IP clause in each solicitation to see whether you or Canada would own the foreground IP.
• Confirm that your proposed ownership and licence terms let the buyer use the deliverables for the purposes the contract specifies.

The obligation is set by each solicitation and clause, so check the SACC references and supplemental conditions in every bid.