BLG: Intellectual Property

Sep 15, 2012

Obtaining contracts with the Canadian federal government is often a crucial ingredient for companies who have developed, or are seeking to develop, innovative technologies for use in the defence and security sectors. However, the bargain of contracting with the Government of Canada is often one whose risks are not fully appreciated until it is too late. Companies therefore need to stop entering into contracts with the federal government with their eyes wide shut. Take the time to understand the intellectual property (“IP”) risks during the tendering process. Otherwise, you may find yourself not owning the IP you developed while having onerous and ongoing obligations owed to the federal government that can be difficult to dislodge once agreed to.

The default position typically taken by the federal government in funding agreements is that in exchange for providing a “contractor” with funding, that contractor must give up its claim for ownership of the underlying IP. The contractor may get a limited license to use the IP that it creates but the contractor will not own the IP, and therefore, may have limitations placed upon its ability to unilaterally exploit the IP commercially.

The very best case scenario that a contractor can hope for in contracting with the federal government is to be able to own the IP without having to provide the federal government any form of license or ongoing obligations. If you find yourself in this position, you likely have strong political winds at your back or your product is extremely unique and in high demand. However, chances are you will not find yourself in this situation. The next best thing is to own the IP and ensure that the federal government only has a limited license to use the IP and technology, without onerous ongoing obligations.

Generally, the default position taken by the federal government is that it owns all “Intellectual Property” rights in the “Foreground Information” as soon as it comes into existence, and that the contractor has no rights except as granted by the federal government.

These terms are important since they do not have meaning in every day language. For example, while intellectual property is a term often used to refer to patents, trade-marks, copyright and a host of other forms of property defined by federal legislation, the term “Intellectual Property” in most government contracts includes the traditional terms plus “any information or knowledge” relating to the “Work” as well as “know how”, a term that refers to knowledge of how to commence and carry on a particular operation based on individual skill and experience.

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Hafeez Rupani is a member of Borden Ladner Gervais’ Defence and Security Industry Group and primarily practices in the areas of intellectual property and commercial litigation. He can be reached at
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