33.1.1. In most projects, the Contractor will need to use some type of Intellectual Property ("IP") in order to deliver the Service. The Contractor may use: (i) IP it owns, (ii) IP developed by a third party or (iii) IP owned by the Authority, or, more commonly, a combination of all three. If the Contractor uses IP developed by and belonging to a third party or the Authority, the Contractor will need a licence to use it.
33.1.2 The IP may already be in existence or created to have a general application or may be specifically developed for the relevant Project. It is important to draw a distinction between:
(a) IP created specifically for the Project i.e. Project Data (which is known as 'foreground IP' (see further Clause 31.2(d) (Provision of Information)) and
(b) IP that is either created or already owned by the Contractor, a third party or the Authority for a wider purpose than the Project (which is known as 'background IP')
because they may be treated in different ways. Foreground IP may be transferred to the Authority whereas background IP will usually just be licensed to the Authority (see Section 33.3 (Ownership and Licensing of IP) below for more information on the different treatment of foreground IP and background IP).
33.1.3 The Contract must require the parties not to breach any terms of any licence to use IP and not to infringe the Intellectual Property Rights of any owner of IP used. The Contract must set out what happens if any breach or infringement of IP occurs.
33.1.4 Irrespective of who owns the IP, however, the Contract must ensure that the Authority is able to use any IP required to provide the Service if it takes over the Service or employs / procures a third party to perform the Service (e.g. on expiry or early termination of the Contract).
33.1.5 Where IP and IPR are of central importance to the Contract (e.g. in certain defence projects, most notably equipment or simulator projects) further refinements and developments of the issues outlined in this Section may be appropriate.1
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1 Reference should also be made to the Managed ICT Services Model Services Agreement and Guidance] published by Local Partnerships at http://www.localpartnerships.org.uk/.