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Buyer Beware IP Issues in Corporate Purchasing

By Cedric G. DeLaCruz

Every year, large multinational corporations purchase billions of dollars of goods and services for both internal use and for resale. While seemingly unrelated to traditional disciplines of patent, trademark, trade secret and copyright law, corporate purchasing is surprisingly replete with a myriad of intellectual property related issues. Such purchasing can include a combination of goods and services. For example, computer hardware and software may be purchased/licensed in conjunction with professional services, such as software consulting. While corporate purchasing has been relegated traditionally to the back burner, especially when considering issues related to intellectual property, the purchasing of goods and services does involve significant issues in all the major intellectual property law disciplines.

Generally, in any purchasing engagement, there will be an exchange of company and third-party supplier information, materials and data. Ideally, the purchasing company should take as many measures as possible to protect as much of its own information and, conversely, as little of a vendor's information as contractually possible. During the course of establishing contact with a vendor and making an actual purchase, the vendor will invariably be exposed to sensitive company information while, for example, making on-site sales calls, performing system or software maintenance, conducting demonstrations, and/or implementing the purchased goods. In some situations, a nondisclosure agreement between the company and supplier executed prior to any purchase may provide the necessary protections or, alternatively, the actual purchase agreement may incorporate confidentiality provisions.

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