Jusletter IT

Depending on which side of the negotiation table you’re sitting on, the definition of intellectual property (IP) can be most relevant for the outcome of IP ownership, IP licensing and IP liability. For instance, whereas a software developer might want to retain as much (newly created) IP as possible and limit her liability regarding 3^rd infringement of the software, her customer will likely seek a broad IP license and IP indemnification if the software infringes 3^rd party rights. Often, know-how is forgotten by the parties. Does IP include know-how?

Know-how can be defined as knowledge of the methods or techniques of doing something, especially something technical or practical¹, and possibly smoothly and efficiently, also known as expertise². Legally, know-how might be summarized as information relating to IP and its exploitation³. Art. 1(1)(i) of the European Technology Transfer Block Exemption Regulation (TTBER)⁴ defines know-how a package of practical information, resulting from experience and testing, which is (i) secret, (ii) substantial, and (iii) identified (i.e. allowing verification of the qualifiers secret (i) and substantiality (ii)).

Hence, a common definition of know-how does not seem to exist. But at least there seems to be common understanding that know-how and trade secrets⁵ are not identical terms⁶: whereas the legal term «know-how» seems to be a trade secret, a trade secret is not necessarily know-how.

Applying this legal understanding to the software development example, the owner and licensor might grant access to the software code, but not necessarily also to the underlying development know-how. As example, a way to prevent access to such trade secrets might be compiling the source code.

If know-how is knowledge, information and/or experience it is undoubtedly intellectual property. As noted above, legally it is also a trade secret. Given the diffuse and unclear scope of the term «know-how» and what the parties might assume it includes (or does not include), it is recommended to clarify its integration or exclusion in any contractual definition of IP. This might be achieved by either enumerating the types of IP in a conclusive list (e.g. «IP means patents, copyrights, trademarks»); or, if the list of the types of IP is deliberately not conclusive, by explicitly excluding know-how from such definition (e.g. «[…] but in any case excluding know-how»).