Chapter 27 - Software Licensing and Maintenance Contracts

27.8.2 Determining the appropriate IP rights for the Commonwealth

In determining IP rights, agencies should examine the particular requirements of the acquisition to help determine the appropriate rights the Commonwealth will need:

• Procurement of commercial software and ancillary services - Commercial off-the-shelf software (COTS) is virtually always subject to standardized licensing agreements. In certain instances, the terms of the license may be negotiated, particularly regarding financial terms; however, suppliers should not be expected to divest themselves of ownership of COTS software enhancements or derivative works of such software. Also, suppliers will want to maintain ownership over deliverables related to the maintenance, installation and configuration of COTS software.

• Procurement of standardized IT services (such as hosting or disaster recovery services) - These offerings typically do not pose difficult IP issues, and the Commonwealth can receive appropriate use rights through the licensing of IP embedded in the service.

• Procurement of consulting services involving customized deliverables - In this instance, the Commonwealth may legitimately require ownership of certain deliverables. However, the Commonwealth can still retain the IP rights in work product deliverables while allowing a license back to the contractor. This approach usually provides for increased competition and greater negotiation success.

• Procurement of systems integration services - A systems integration contract may involve COTS software and ancillary services, custom deliverables and deliverables that combine newly created IP with pre-existing supplier IP. In this situation, it is advisable for purchasing agencies to utilize IP ownership clauses in the contract in which particular types of IP can be designated as licensed back to the Commonwealth, owned by the Commonwealth (with or without a license back to the supplier) or jointly owned.