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Intellectual property

IP Australia is an Australian Government agency. It defines intellectual property (IP) as:

…the property of your mind or proprietary knowledge. It is a productive new idea you create. This can be an invention, trade mark, design, brand or even the application of your idea.

The NSW Government and its agencies, along with local councils, have IP ownership over a wide range of products, including computer programs, advertising and promotional materials, publications, and training materials.

NSW public sector agencies normally have IP over material they commission. This is regardless of whether the agency or council has used an external consultant to create any product or materials.

IP is often referred to as an intangible asset. The way it is managed by the NSW public sector and local councils, however, should be no different from the management of a tangible asset.

Authorised private use of IP
A doctor, who was a public official employed in a NSW hospital, established a private company to develop, market and sell health software. The ICAC received an allegation that the doctor was conducting work for his private company in normal working hours, using resources and IP from the public hospital.

Enquiries made with the hospital found that the doctor had consulted the hospital’s chief executive officer (CEO) about his business and had negotiated an agreement that a percentage of the business profits would be directed to the hospital.

The doctor’s business venture had been approved by the CEO and reviewed by the hospital's solicitors. It was found to fall within the doctor's standard rights to private practice and to be of benefit to the hospital.

Source: Complaint to the ICAC.

Corruption risks

Any public sector agency that creates new systems, processes, inventions, products or publications that have a commercial value, will be exposed to corruption risks around misuse of IP. Agencies engaging temporary or contract staff in activities that produce IP may be more exposed to these risks given that such staff often have existing industry networks outside of their public official role that can be exploited for improper gain.

Common corruption risks involving IP include:

  • a public official using an agency's IP during outside employment
  • a private individual or organisation bribing or being solicited by a public official to secure access to an agency’s IP
  • a public official providing an agency’s IP to a private business in the hope or expectation of securing post-separation employment
  • a public official deliberately failing to implement security measures for IP protection for the purpose of misusing this information for their own or another's benefit
  • a public official misusing commercial-in-confidence information that belongs to another party such as a supplier.

Developing a strategy

Agencies will most likely benefit from having a written policy and procedures in instances where they have a clear idea of their IP and they have taken the time to consider and manage possible associated corruption risks.

A policy is worth considering given that IP ownership is not always immediately clear. For example, it may not be immediately clear whether a NSW public sector agency owns the IP of a new research tool created by a consultant researcher employed by a public agency. A definitive decision may depend on the conditions of their consultancy agreement.

The NSW Department of Premier and Cabinet's Intellectual Property Management Framework (2005, reviewed 2014) sets out mandatory principles for managing IP. Public health agencies are also required to comply with NSW Health’s Policy on Intellectual Property arising from Health Research (2005, reviewed 2017).

The NSW Crown Solicitor can advise and act for NSW Government agencies on a wide range of commercial agreements. These include:

  • industry assistance agreements
  • general commercial agreements
  • IP agreements (including copyright, patents, trademarks and design agreements, and licensing arrangements)
  • IT contracts.

Given IP is a type of asset, agencies should give serious consideration to their IP strategy being part of their asset management plan and how it may be incorporated into their internal audit and corruption-risk management programs.

An agency seeking to conduct a risk assessment of its IP management should consider the following measures:

  • assigning responsibility for determining how IP is used to a dedicated position
  • creating and maintaining a record of decisions on how an agency’s IP will be used, including whether or not it will be sold or shared
  • creating and maintaining a register identifying the agency’s IP and any external IP the agency has permission to use
  • evaluating and recording the financial value of an agency’s IP and tracking any appreciation or depreciation in this value over time (for instance, this could be done as part of a corruption risk assessment, including the name of the person who made the valuations and the date, which could be important for tracking potential conflicts of interest)
  • assessing and recording financial and other costs that may arise in the event that an agency’s IP is misused, stolen or distorted (for example, reputational damage, diluted IP rights or reduced profits from IP)
  • considering if employment, consultancy agreements or other third-party contracts may require clauses related to IP ownership, especially where companies or individuals are involved in developing or managing IP for, or on behalf of, an agency
  • depending on the scale and significance of the IP, directing employees to notify management of any IP they create in the course of their employment
  • conducting an assessment of, and recording the risks around, IP use by prospective contractors or consultants prior to their engagement, especially in cases where a contractor’s or consultant’s IP could come into conflict with that of the agency
  • establishing an IP committee to manage IP interests, depending on the scale and significance of the IP
  • requiring severance agreements for departing employees to establish the arrangements around the use of the agency’s IP.

It is important to note that corruption risks around IP are often closely connected to outside employment and conflicts of interest. In that context, it is worth remembering that usefulness and effectiveness of any agency’s policy will depend on having staff who understand it and are both able and willing to comply with it.

ICAC publications that may assist in dealing with IP include its conflict of interest publications and Managing IT contractors, improving IT outcomes (August 2013), the latter of which includes some advice specifically on preventing corruption around IP. Additional advice about IP can be obtained from the Audit Office of NSW’s Management of Intellectual Property – Guide to Better Practice (2011).

Reviewed December 2018