Commercialization in Canada

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Item Information

Revision History

Date Status ID Title
2020-07-01 Active K3415C Commercialization in Canada (2020-07-01) K3415C
2008-05-12 Superseded K3415C ARCHIVED: Commercialization in Canada (2008-05-12) K3415C

Remarks – Recommended Use of SACC Item

Use the following clause in contracts when the contractor is required to exploit the Intellectual Property in the Foreground Information in Canada.

The following clause must not be used in a contract for the procurement of goods or services which is subject to the procurement disciplines of any of the international trade agreements. Any use of this provision should be tailored to the specific circumstances of the situation as the clause may be difficult to enforce or may impose impractical restrictions on the contractor's commercialization and thus may result in the contractor failing to commercialize the IP. Furthermore, the use of the clause will require on-going monitoring by the client department.

Legal text for SACC item

  1. In consideration of the Contractor receiving ownership of the Intellectual Property Rights in the Foreground Information, the Contractor agrees that manufacture of any product incorporating or derived from the Foreground Information will be done substantially in Canada and that the provision of any service incorporating or derived from the Foreground Information will be substantially from a base in Canada.
  2. The client department or agency for whom the Work is being or was performed will determine what evidence will be required to demonstrate that the obligation set out in subsection 1 has been met and will set the time period required to meet it. When the obligation has been met in relation to any part of the Foreground Information, the obligation will cease to apply to that part of the Foreground Information.
    If at the end of the period specified by the client department or agency, the obligation to market and sell a product or service as required has not yet been satisfied in relation to any part of the Foreground Information, the Contractor must immediately submit to the client department or agency, a report setting out:
    1. a description of the efforts that have been and will be made by the Contractor to satisfy the obligation; and
    2. the reasons why the obligation has not been satisfied.
  3. At the expiration of the period specified, if the client department or agency for whom the Work is being or was performed is satisfied that the Foreground Information is capable of commercial exploitation in Canada but that:
    1. the Contractor is incapable of achieving that; or
    2. the Contractor has not made every reasonable effort to fulfil the obligation; then that client department or agency may invoke either of the remedies set out in subsection 5. If that department is satisfied that the potential value to Canada of commercial exploitation of the Foreground Information substantially in Canada so justifies, it may also extend the time for the Contractor to fulfil the obligation.
  4. The Contractor agrees that any of the following, affecting any part of the Foreground Information, would constitute a breach of the Contractor's obligation entitling Canada to exercise, in relation to that part of the Foreground Information, the option to collect the liquidated damages provided for in the Contract (if any) for such a breach, or, without affecting any other remedy available at law or under the Contract, to exercise a remedy set out in subsection 5:

    1. the Contractor or any affiliate, subcontractor or agent of the Contractor manufactures outside Canada a product incorporating or derived from the Foreground Information without that product also being manufactured substantially in Canada, or provides from a base outside Canada a service incorporating or derived from the Foreground Information without that service also being provided substantially from a base in Canada;
    2. through the act or omission, whether direct or indirect, and whether deliberate or negligent, of the Contractor or an employee or a subcontractor (including the sale or assignment of the Foreground Information or license or other authorization of the use of the Foreground Information), any person or entity is enabled to manufacture outside Canada a product incorporating or derived from the Foreground Information without that product also being manufactured substantially in Canada, or to provide from a base outside Canada a service incorporating or derived from the Foreground Information without that service also being provided substantially from a base in Canada;
    3. the Contractor or a controlling interest in the Contractor, is acquired by a person not resident in Canada or by an entity controlled outside of Canada, and that person, or other entity does not enter into an agreement with the department or agency for whom the Work is being or was carried out concerning the use of the Foreground Information, promptly and before a breach described in paragraph (a) or (b) has occurred; or
    4. to the extent permitted by the laws applicable in Canada, the Contractor becomes bankrupt or insolvent, makes an assignment for the benefit of creditors, or takes the benefit of any statute relating to bankrupt or insolvent debtors, or the Contractor suffers the appointment against it of a receiver under a debt instrument or by a court, or an order is made or a resolution passed for the winding up of the Contractor.
  5. In the event of a breach of subsection 3 or 4, the client department or agency for whom the Work is being or was performed may, by notice, either:
    1. require the Contractor to assign or transfer to Canada at no cost the Intellectual Property Rights in the Foreground Information; or
    2. require the Contractor to provide to one or more persons, or other entities specified by that client department or agency at no cost a non-exclusive, perpetual, unconditional, irrevocable, world-wide, and royalty-free license permitting the commercial exploitation of the Intellectual Property Rights in the Foreground Information, including the right to further develop the Foreground Information and to own the Intellectual Property Rights in any such further development.
    The Contractor agrees that it will promptly execute such transfer documents relating to ownership or licensing as the client department or agency may require, and that it will afford that department or agency or a licensee, as the case may be, at that party's expense all reasonable assistance in the preparation of applications and in the prosecution of any application for registration of any Intellectual Property Rights in any jurisdiction arising out of the Foreground Information, including without limitation the assistance of the inventor in the case of an invention.
  6. In the event of a breach described in paragraph (a) or (b) of subsection 5 , in addition to all other remedies available to Canada at law or under the Contract, the Contractor must upon demand pay to Canada any net revenues earned by the Contractor as a result of the breach.