The second edition of the CIC Protocol was released earlier this year, replacing the original version produced in 2013. The protocol is intended to be used alongside common construction contracts and supports the use of 'Level 2' BIM. It stipulates certain rights and obligations of parties to those contracts, including the 'Employer' and 'Project Team Members', to encourage the collaboration that BIM provides for.
BIM is the use of digital modelling to improve the design, construction and operation of the built environment to enable the client and supply chain to realise a range of benefits such as the predictability of costs and programme management during construction and thermal efficiency projections during post-occupancy.
Whilst the first CIC Protocol was a welcome move towards a straightforward and standardised contractual provision for BIM, it did have a number of problematic aspects relating to IP. Examples included:
- the requirement that where any BIM IP is owned by third parties, the Project Team Member or Employer must obtain a sub-licence from such third party owner;
- no restriction on wide sub-sub-licensing by Employer of Project Team Member IP – even to potential competitors;
- modification of material supplied by a Project Team Member whose employment has been terminated – being potentially unfair in situations where Project Team Member whose termination has been on a 'no fault' basis, for example where a force majeure event occurs or in the event of non-payment.
Improvements in the second edition
Some of the criticisms have been addressed in the CIC Protocol second edition.
First, the Protocol no longer automatically takes precedence over existing agreements, whereas the first edition explicitly varied and took precedence over any conflicting IP provisions in other contracts. This allows more flexibility in tailoring IP solutions than the imposition of the blanket terms of the first edition. Only if the other agreement contains no IP provisions will the IP provisions of the CIC Protocol apply automatically.
In fact, Clause 6.1 helpfully states that if there are any IP provisions in the agreement which relate to any material provided by any Project Team Member, Clauses 6.2, 6.3 and 6.4 of the Protocol will not apply. Those clauses, among others, concern IP rights and licensing and sub-licensing issues.
This means that the parties do not even need to specifically address order of precedence as to whether the IP terms in their agreement or the Protocol will prevail.
One of the gaps in the first edition was the fact that the definition of 'Materials' only covered information in an electronic medium. This led to a situation where parties could rely on the Protocol in respect to IP in Materials in electronic form, but would need to set out separate arrangements with regard to Materials in tangible form, for example designs on paper, drawings, models and prototypes. The new Protocol removes this limitation and covers Materials in any format.
A provision of the first edition which was often misunderstood and hence caused difficulties was a statement that the licence/sub-licences granted by Project Team Members to the Employer may be suspended or revoked in the event of non-payment. This has now been removed. This is helpful to Employers and Other Project Team Members in ensuring continued access to materials, but lessens the control for the Project Team Member over ownership of its Materials.
Some issues persist
The obligation on Project Team Members to procure the grant of licences to the Employer from the owners of third party Materials is still in place. This is framed as an absolute obligation rather than the more market standard obligation to "use reasonable endeavours to procure" which recognises the lack of ability to control third parties.
This licence is also still required to include the rights for the Employer to grant unlimited sub-licences to Other Project Team Members and for them to grant further sub-sub licenses to their sub-contractors. This is still, in our view, an unattractive obligation which does not reflect market position and is likely to be difficult to comply with in practice. It is one aspect of the Protocol which Contractors would be well advised to seek to vary in the project agreement itself.
The Employer is also still obliged to grant sub-licences of its own proprietary materials to Project Team Members which include wide rights to grant sub-licences to their sub-contractors. Again, this takes away control from the Employer of the scope to which key materials and IP therein can be disseminated. Where such proprietary materials are owned by Project Team Members, this obligation also extends to granting such wide licences to Other Project Team Members, which is good for the Other Project Team Members, but takes away control by Project Team Members of their own materials.
The obligations regarding grant of licences/sub-licences of the Employer and Project Team Member set out in the preceding two paragraphs are still stated to be "representations". Since breach of representation allows a contract to be rescinded, this has far-reaching consequence if a party is unable to obtain the consent of the relevant owner of materials to the grant of sub-licences on the required terms – which of course will generally be outside the reasonable control of a party.
The right to amend and modify material without the owner's consent following termination of the Project Team Member's employment is still in place. This is a good provision for the Employer, preventing advanced projects being blocked by withdrawal of rights to use such materials, but is a potential risk for Project Team Members whose engagement has been terminated for reasons not due to their fault and who would now see their IP being modified by Employer and Other Project Team Members, some of which may be competitors.
Finally, the Protocol still takes a 'construction lawyer's' approach to IP in style, rather than that of an 'IP lawyer'. This is manifest in the focus on copyright, with no express mention of related but important rights such as design rights and database rights.
Louise Fullwood is an expert in IP rights and licensing at Pinsent Masons, the law firm behind Out-Law.com.