|By Frances McCart,
Vice-President, Business Development at Eagle
Competition in the business world is fierce and some industries are more intense than others, innovating at an extremely fast pace. The slightest delay in a new product release or minor variation in product features could be the difference between being first to market and that can have a drastic impact to the bottom line. To ensure that clients protect their position in the marketplace, clients go to great lengths to protect their IP, including tools utilized to develop new products. Being an IT contractor, often working on new projects that impact a client’s market offering, you have the opportunity to work on leading edge projects with leading edge tools. Clients realize the risk they have in bringing on contractors and thus have strict contracts regarding the access and use of IP and tools.
Most client contracts go beyond the basic details of pay rate, job description and invoicing details. Client contracts typically have many clauses built in to ensure they are protected from external resources sharing and reusing information gained while on contract with them. Typical protection clauses include confidentiality agreements, non-competes, intellectual property rights, ownership of information, data security and data privacy clauses. These clauses are often followed with client schedules going into further detail on each of these clauses.
If you have been a contractor for many years, you are not a stranger to these clauses and understand their implications. With the influx of IT resources into the Canadian marketplace and the rise of the “gig economy” there are many new players on the scene. Often, these resources do not take the time to fully understand the clauses they are agreeing to and the impact on future use of data/products they gained during the time with the client.
When signing a new client agreement, it is important that contractors take the time to read the contract, and where needed, seek external legal guidance on the clauses and implications to your business. 99% of the time, contractors understand and adhere to these clauses but there are always a few contractors who take liberties with the knowledge they have gained or developed while working with a client. Breaching these clauses has serious legal and financial ramifications and can impact future contracts.
For example, very innocently, you may believe you have the right to take home data or files after a project is completed because you feel you own it, after all, you created it. Perhaps it’s so you can bring its value to future projects or maybe you’d just like to use it within your portfolio and score future gigs. But when you agree to work with a client and sign-off on their contract, you do not own any of this. Certainly, you own the knowledge capital that you brought to the project but what you do with it is owned by the client. They’re paying you for that knowledge and your work, so everything you work with while at the client site is owned by the client.
What can you do about this? You could ask to modify the contract and edit the clauses so they suit your needs, but this will rarely become reality. Clients’ lawyers carefully worded those clauses to protect them as best as possible and they are not up for debate. Their privacy and confidentiality are of higher value to them than any individual could possibly bring.
Instead, it’s best to accept that they exist and ensure you don’t do anything that might raise some red flags with the client. For example:
- Don’t access external sites when working that are not on the client’s approved list.
- Don’t send documents to your personal email, even if it’s harmless and you have full intentions to delete them.
- Don’t print client reference material and bring it home, again, even if you plan to destroy it once you’ve completed your work.
- Don’t take copies of software.
- Don’t keep any devices given to you once you depart a project.
- Ensure that all material and anything “owned” by the client is returned at the end of the project.
You can also take a few measures ahead of time to protect yourself and your own work:
- Understand clauses fully and have them reviewed by your lawyer. They often extend beyond the end date of the contract so know what restrictions that might have on you before signing.
- If you know that you will be using your own methodology or technology that you are bringing to the client, get your ownership of it in writing up-front. A heads-up though, this will involve lawyers and will have extra costs for you.
- If you want to take home samples, not to share with competitors but to use in your portfolio, discuss it with the client and agree what is alright to be used and what you can say about it. Ensure this is all in writing.
- If you are given any technology at the end of a project, for any reason, get a written release.
Clients usually have audit rights written into their contracts, meaning they can (and will) check in on you at any time to ensure you’re following their procedures and protecting their information. As already mentioned, neglecting their terms could result in the loss of your contract, legal proceedings and a damaged reputation. I always strongly recommend your lawyer reviews your contracts before you sign anything (if the terms are new to you) and if you believe you might bump into any situation where you’ll want to take home your work, make you completely understand those specific clauses inside and out.