Sorting out background from foreground IP - why IP clauses in service contracts matter

The recent case of Wilkinson v London Strategic Health Authority [2012] EWPCC 48 is a useful reminder of why it is always important in any contract for the provision of services, to have a clear intellectual property clause dealing with existing ('background') IP and resulting ('foreground') IP.

Background

Dr Wilkinson had developed certain background materials (referred to as the 'Established Works') regarding communication skills for nurses working with cancer patients. In 2002 in conjunction with other academics working in the field and contracting through two cancer charities she began working with the NHS University ('NHSU') on a programme to establish an advanced model for communication skills training that could be rolled out nationally (the 'Programme').

The charities later withdrew and in 2006 it became necessary to contract directly with each of the academics. Dr Wilkinson signed an agreement with the London Strategic Health Authority ('SHA'), which had by this time taken on responsibility for the Programme from NHSU, sometime during mid-2007.

Dispute

A dispute arose as regards whether copyright in the Established Works had been assigned to the SHA by Dr Wilkinson under a provision in the 2007 agreement which stated that 'all intellectual property rights associated with any intellectual property arising from the performance of the Services and the documents and other work prepared by the Consultant pursuant to this Agreement shall belong to the SHA.'

Dr Wilkinson contended that the effect of this provision was to assign foreground IP generated in the course of providing the services, but not the Established Works. She contended that the extracts of the Established Works incorporated in foreground IP could be used by the SHA under an implied licence, but that the licence was limited to use in the fields of cancer and end of life care.

Decision

The Court held that the terms of the 2007 agreement did not assign copyright in the Established Works to the SHA, distinguishing the case from that of Metzler v Curwen in which original music modified and assigned to a Metzler was held to have prevented a variant of the same music being assigned to Curwen. The Court held that, although Metzler proved that assignment of copyright in later works could include preceding works, this was not the correct interpretation here as in Metzler there was a positive assignment of an existing copyright. In this case however, the contract envisaged that new works would be created and, upon creation, assigned. The Court did not consider that such a contractual clause could assign copyright in an existing work. Whilst the Court agreed that the SHA had an implied licence to use the Established Works that were incorporated in the foreground IP, it did not agree that the SHA was limited in terms of scope of use of the materials as there was nothing in the 2007 agreement to fetter its use or exploitation of the foreground IP.

Comment

The judgment is, on the one hand, not surprising given the lack of an express intention to transfer copyright in the Established Works. That said the Court clearly performed a balancing act here to come to reach a position that allowed the SHA to continue to be able to use the foreground IP and did not deprive Dr Wilkinson of her rights in the background. The net effect was that the parties could each continue to offer competing training courses – perhaps not what either would ultimately have wanted.

The lesson to be learned here is that where one party provides services for another the parties should, from the outset, discuss and agree the position as regards foreground and background IP so that this can be clearly articulated in the relevant contractual provisions. A failure to do so can leave both parties in a position where there is a lack of certainty regarding who can use the IP (and for what purpose) and, ultimately, potentially open to an infringement action by the other.