27.4.1 The Contract will also need to deal with what happens to IPR on a termination (whether early (see Section 21 (Early Termination)) or on expiry of the Contract (see Section 20 (Treatment of Assets on Expiry of Service Period)), particularly in circumstances in which software or similar assets have been developed for the specific project. Examples of this could be a simulator training project or a similar project, where if the Project is to be transferred to the Authority on a termination then IPR should also be transferred as the Project would be unworkable without this.
27.4.2 Generally, the Authority should be entitled to a free and perpetual licence of IPR specifically developed for the Project (e.g. specially written software) for use in that project only (either by it or an alternative provider of the Service). The Authority should not usually attempt to extend its right to use such IPR in other projects but should be entitled to negotiate a price for its use on other projects,517 having taken into account any development costs incurred in producing that software. Particular issues may arise on certain projects that make such licences impossible to obtain.
27.4.3 In respect of other IPR central to the Project such as third party software licences, the Contractor should ensure that the Authority is either entitled to a novation of such licences or has the right to obtain a licence of such software at commercial rates. It is for the Contractor to ensure that any licence it (or its sub- contractors) enters into reflects these requirements. If the Contractor is unable to ensure that the Authority will have the benefit of all necessary IPR, it must indemnify the Authority against any costs incurred due to such non-availability. For example, if the Contractor chooses to use proprietary software, it must bear the risk if the owner will not agree to licence such software to the Authority or replacement Contractor. Similarly, the Contractor must bear the risk of the owner of the relevant IPR being prevented from licensing such IPR to the Authority or replacement Contractor due to trade restrictions imposed by its Government. If the Contractor does not want to bear such risks, it should find alternative IPR which is capable of being licensed to the Authority.
27.4.4 In addition to ensuring that the Authority has the right to use IPR required to continue provision of the Service (e.g. on expiry, early termination or Authority step-in), arrangements should wherever possible be put in place to ensure that the Authority has immediate access to such IPR and any information required to operate it. For example, source codes of IT products should be held in escrow by an independent party (e.g. the National Computer Centre). It should be noted that an additional or new service provider will need access to IPR in advance of the Expiry Date or the commencement of its service contract in order to acquaint itself with the Service and allow a smooth handover and such access rights should be negotiated in advance, rather than left to be resolved on termination.
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517 If it is likely that the Contractor will be able to commercially exploit any IPR developed for the Project, the Authority should consider whether or not revenues from IPR exploitation are likely to be significant and whether it should require the Contractor share any such revenues with the Authority.