Beware of IP when using the Outcome Agreement templates

The scenario

Outcome Agreements using or based on MBIE’s Outcome Agreement templates are frequently used by agencies to contract with NGOs for the delivery of outputs, particularly in the social sector. The Outcome Agreement comprises a front end ‘Agreement’ document with a number of appendices, and Framework Terms and Conditions that are incorporated by reference.

Assume you’re working on an Outcome Agreement that involves creation by the provider of documentary outputs that your agency wants to be able to use or share with other community organisations. Do you need to be aware of any issues with the intellectual property (IP) clauses in the Outcome Agreement and, if there are issues, how do you deal with them?

Why does this topic arise?

This topic arises in the context of Outcome Agreements due to the default IP provisions in the standard Framework Terms and Conditions. Under those Framework Terms and Conditions:

• ownership of new IP vests in the provider (unless otherwise agreed);
• ownership of pre-existing IP is unaffected;
• the owner of any new IP (usually the provider) grants to the other party a licence to use, copy, modify and distribute the new IP “for any purpose connected with the performance of the Outcome Agreement and any Agreed Uses”; and
• “Agreed Uses” for new IP are to be recorded in the Outcome Agreement (in the front end of it).

Two issues

In practice, in the kind of situation we’re looking at, two issues can arise:

• First of all, a provider may use its pre-existing IP in funded outputs, but the Framework Terms and Conditions contain no licence to the Purchasing Agency in relation to pre-existing IP. This can create problems if the Purchasing Agency wants to be able to use certain outputs (e.g., documentary outputs) and no licence of pre-existing IP is granted to the Purchasing Agency.
• The second potential issue is that the scope of the licence over new IP is limited, as noted above, to “any purpose connected with the performance of the Outcome Agreement and any Agreed Uses”. In some cases the “performance of the Agreement” wording can be too narrow. “Agreed Uses” could fix this issue (where it exists) but the “Agreed Uses” placeholder in Appendix 6 of the Outcome Agreement’s front end is often left blank. Note also that “Agreed Uses” is only intended to relate to new IP (see clause 10.3), not pre-existing IP.

Solution

So, if your agency is using an Outcome Agreement and it needs rights to use and share funded outputs, such as documentary outputs, it’ll probably need to amend the IP clauses or replace them with alternative provisions.

A sample ‘Licence to Purchasing Agency’ clause can be found in the Contract Foundry’s clause library. If you have a .govt.nz or parliament.nz email address, you can sign up to the knowledge base for free, and you’ll get limited-time access to the clause library where you’ll find the licensing clause. If you don’t have one of these email addresses but are still in the public sector, let me know and I’ll add your agency’s domain as a qualifying domain. Happy drafting.