FRAMEWORK AGREEMENTS i.e. Transferring IP Rights Once And For All

There is no doubt that entities operating in innovative industries should take special care of acquiring intellectual property rights. To do this effectively, it is crucial to distinguish between the definite transfer of IP rights and their licensing. Managers of industrial, technology or start-up companies should be aware that these two legal structures differ from each other. It should also be remembered that in order to acquire the full copyrights or industrial property rights in Poland, it is necessary to conclude an appropriate agreement in written form. So – if a written agreement is required to transfer IP rights,  is it necessary to sign a separate contract for each new project? Definitely not, and this is where framework agreements come in.

Requirement of a written form

Framework agreements enable the avoidance of signing separate contracts for specific tasks or projects, while maintaining at the same time the appropriate form of the contract, i.e. the written form. In practice, many entities struggle with the problem of maintaining this form, especially if they carry out orders in cooperation with contractors from the USA or UK. Managers of companies from these countries often do not understand that in Poland there is a requirement to sign documents transferring IP rights in a paper form. Misunderstandings in this field are not resolved by an electronic signature;  for such a signature to have the equivalence of a handwritten signature (and, in effect, for electronic contract to be equivalent to a written contract), it would have to be a qualified signature, i.e. a signature validated with a qualified certificate issued by a Polish e-signature provider. Such certified e-signatures are more and more often used in Polish companies. Nevertheless, in relations with foreign contractors, it is de facto impossible to conclude a contract with their use.

One agreement, many projects

Conclusion of a written framework agreement solves the above problem. As part of such an agreement, parties define general rules of cooperation and the transfer of IP rights, while individual projects are implemented on the basis of individual orders issued for example by email. Thanks to that, the actual signing of the contract takes place just once, and the parties ensure the desired flexibility of further cooperation and submission of orders, while maintaining the specific requirements of Polish law.

Elements of the framework agreement

Framework agreements should define the rules of long-term cooperation and, for example, a minimum level of services (so called service level agreements – SLAs). It is also very important to clearly set out the rules for placing orders for individual projects, particularly, the procedure for ordering products or services, setting their price or remuneration for the contractor, as well as delivery conditions or implementation schedules. The framework agreement should also define the acceptance rules, guarantee liability rules, confidentiality rules and other elements important for the parties, which may be shaped in accordance with the principle of freedom of contract. Of course, the key provisions of the framework agreement are also those relating to the transfer of copyrights to the works created under the contract, including, for example, software, as well as industrial property rights to inventions, or, rights to know-how created as part of cooperation.

Individual orders

Current individual orders are placed by the parties in a much less formalised way, for example by e-mail or even simply by phone. As part of placing orders, the parties specify the subject of a given order, including the date of completion, detailed terms of delivery, as well as remuneration and method of payment. When establishing ordering procedures, the parties also often use order forms (in American entities these are called SoW, or “Statements of Work“), which allow the standardisation of the ordering procedures and the avoidance of errors or omissions.

Market practice

In practice, framework agreements work very well in innovative businesses. Thanks to the framework agreements, parties go through the strategic negotiation process only once, while the details of individual orders are agreed at the operational level. Framework agreements also provide security in the formal aspect, meaning that there is no need to involve a legal advisor for each project, which significantly speeds up the procedures and, simply put, facilitates running a business. What is more, the conclusion of a framework agreement usually does not bind [or shackle / tie down] the parties at the business level, and does not force them to place a strictly defined number of orders. In most cases, contractors retain their freedom, i.e. they have an agreement that effectively regulates their cooperation and guarantees, for example, the correct transfer of the IP rights, while orders for individual projects are placed as needed.

Where do framework agreements fit best? Our experience shows that it is primarily the broadly understood IT industry, where framework agreements often regulate cooperation with IT developers. Another example is the industrial sector, where machine manufacturers conclude framework agreements with their subcontractors, who, might, for example, be involved in prototyping innovative devices, or producing mechanical parts or components.

Author:

Jakub Pietrasik, legal adviser, senior associate, WOLF THEISS

Last Updated on January 19, 2021 by Karolina Ampulska