Commercial notes No. 25

No. 25
11 January 2008

This issue

The moral of the story: moral rights
in Australia seven years on

SourceIT: summary of intellectual property

Protecting confidential information

Rachel Chua

Rachel Chua Senior
Executive Lawyer
T 02 6253 7086
F 02 6253 7306


It has been over seven years since moral rights were introduced
in Australia under the Copyright Amendment (Moral Rights)
Act 2000. Moral rights protection has since been extended
to performers in July 2007, and the feasibility of recognising
and protecting moral rights for Indigenous communities
has been under consideration for a number of years.

Despite these developments and the occurrence of various
disputes involving moral rights, there has been only one
case, Meskenas v ACP Publishing Pty Ltd [2006] FMCA
1136,1 in which infringement of moral rights
has been successfully established under the new provisions.

This article looks at the state of play in relation to
moral rights in Australia and how this might influence
the way in which agencies deal with and manage moral rights.
In particular, it considers the nature of moral rights,
moral rights disputes under the new regime, managing moral
rights and future directions.

Nature of moral rights

Moral rights are the personal, non-economic rights of
authors in relation to their creations. They are considered
to be rights relating to the expression of an author's 'personality' and
are distinct from an author's right to commercially
exploit their creations.2

Moral rights are conferred upon individuals rather than
departments, agencies or corporate entities. Significantly,
they cannot be assigned or transmitted. This means that
authors will continue to enjoy moral rights protection
even though another party owns copyright in the relevant
material. This has implications for the management of moral
rights by agencies.

Moral rights that are protected

Amendments to the Copyright Act 1968 (the Copyright
Act) on 21 December 2000 introduced the first comprehensive
moral rights regime in Australia for the authors and creators
of 'works'3 and films.4 Specifically,
these rights are:

  • the right of attribution of authorship
  • the right against false attribution of authorship
  • the right of integrity of authorship (that is, the
    right not to have a work subjected to 'derogatory
    treatment' which is prejudicial to an author's
    honour or reputation).

Moral rights protection was also recently extended to 'performers' on
26 July 2007 when the WIPO Performances and Phonograms
Treaty5 entered into force for Australia.6 The
moral rights of 'performership' cover 'live' and
recorded performances consisting of sounds, and are generally
equivalent to the moral rights of 'authorship' given
for works and films, except that the moral right of integrity
for performers appears to be more limited in scope.7

Moral rights apply to most works in which copyright subsists,
irrespective of when they were created,8 and
generally continue for the duration of copyright protection
in the relevant material.9 However, only acts
or omissions occurring on or after commencement of the
relevant provisions have the potential to infringe moral

The two main defences to moral rights infringement are 'consent' and 'reasonableness'.10 However,
there are also special defences to infringement–for
example, where changes are made to a building in circumstances
in which the owner of the building notifies and consults
in good faith with the architect over a six-week period.

Moral rights disputes under the new regime

There have been a number of disputes involving moral rights
in Australia since their introduction in 2000.11 Some
of the more controversial disputes are discussed below.

National Gallery of Australia

The proposed renovations to the National Gallery of Australia
gave rise to the first major controversy back in June 2001
when Col Madigan, the principal architect of the Gallery,
became aware of plans to add a multi-storey glass enclosure
to the front entrance of the building and to make other
changes. Madigan strongly objected to the changes proposed
and the Gallery undertook the notification and consultation
process for buildings in order to avoid moral rights infringement.
However, despite there being no legal requirement to do
so, the Gallery continued its discussions with Madigan
in an effort to reach a mutually acceptable position. Renovations
to the Gallery commenced last year.12

The Garden of Australian Dreams

In 2003, the Carroll Report13 on the National
Museum of Australia sparked controversy when it recommended
that alterations be made to the Museum's Garden of
Australian Dreams. The Garden is described by the Museum
as a 'symbolic landscape'. It features a montage
of images and concepts such as the dingo fence, explorer's
tracks, a map of the linguistic boundaries of Indigenous
Australia and the word 'home' repeated in 100
different languages.14 The Carroll Report's
proposal to add lawn, trees, reproductions of Aboriginal
rock art and a sundial to the Garden led to threats by
landscape architect Richard Weller to take action against
infringement of his moral rights. Weller considered that
the changes proposed were 'offensive to [his] artistic
integrity' and '[made] a complete mockery of
the entire process by which the [Garden] was chosen and
created'.15 The proposed changes never

Pig 'n' Whistle pub

In a similar vein, the well-known architect Harry Seidler
took legal action in 2003 in relation to changes made to
the premises of the Pig 'n' Whistle pub located
at Seidler's Riverside Centre in Brisbane. The owner
of the pub had installed a glass fence and canopy to protect
customers from the wind. He also included signage featuring
a trumpet-playing pig in neon lights.16 Seidler
considered the changes offensive to the building's
geometry and the signage 'vulgar' and claimed
infringement of his moral rights.17 The matter
was settled on a confidential basis but apparently required
an acknowledgment that Seidler was not involved in the
design of the pub.18

Ogawa v Spender

In the 2006 case of Ogawa v Spender [2006] FCAFC
68, the appellant argued unsuccessfully that the reproduction
of her emails in a judgment was a breach of her moral rights.
The respondent judge in that case was held entitled to
rely on the defence of judicial immunity despite the absence
of an applicable defence under the Copyright Act itself.

Meskenas v ACP Publishing Pty Ltd

There has been only one case under the new moral rights
provisions in which moral rights infringement has been
successfully established. That case is Meskenas v ACP
Publishing Pty Ltd [2006] FMCA 1136. It concerns the
publication of a photograph of Her Royal Highness Crown
Princess Mary of Denmark standing in front of a portrait
of the late Dr Victor Chang during her visit to the Victor
Chang Cardiac Research Institute in 2005. The photo was
published in March 2005 in the Australian Woman's
Day magazine, which is owned by ACP Publishing.

Woman's Day wrongly attributed authorship
of the painting to Jiawei Shen–a competitor of the
real artist, Vladas Meskenas. While a personal apology
was given by the chief subeditor, the magazine allowed
the misattribution to go uncorrected for over a year despite
numerous appeals from Meskenas for a formal retraction
and apology. When this was finally published in late June
2006, some 90 phone calls later and just a short time before
the hearing, it showed the photograph and the painting
reproduced in it in reverse, adding to the artist's
distress. The reversal of the photograph arguably constituted
a further breach–this time of the artist's
moral right of integrity.

ACP Publishing was ultimately liable for infringement
of Meskenas's moral rights of attribution of authorship
and against false attribution of authorship. Nominal damages
of $1,100 were awarded for economic loss. But additional
or aggravated damages of $8,000 were also awarded for the
additional hurt caused to Meskenas as a result of the magazine's
conduct after it became aware of its mistake.

What is notable in the case is that the court essentially
held that damages payable for moral rights infringement
are comparable to those payable for copyright infringement
and that, in particular, the principles used to work out
additional or aggravated damages for moral rights infringement
are the same as those applicable in copyright cases.

Managing moral rights

The above disputes illustrate the importance of giving
appropriate consideration to moral rights when dealing
with copyright material. From an agency perspective, it
is important to be aware that, even when an agency owns
copyright, has a licence to use copyright material or can
rely on some other defence to copyright infringement, it
must still consider moral rights because these rights remain
with the author.

For example, where the Commonwealth relies on its statutory
licence under s 183 of the Copyright Act to use third party
material 'for the services of the Commonwealth' or
upon a 'free use' defence to copyright infringement,
it will still need to consider moral rights and manage
these effectively in order to avoid infringement.

Accordingly, agencies should make sure that they obtain
appropriate moral rights consents or otherwise take steps
to increase the chances that they can rely on the defence
of reasonableness in their use, alteration or non-attribution
of copyright material or performances. These defences are
discussed in further detail below.


As noted previously, one of the two main defences to infringement
of moral rights is that the author or performer has consented
to the relevant act or omission. The consent must be in
writing and cannot be obtained by duress or by false or
misleading statements.

However, agencies should be aware that the requirements
for a valid moral rights consent appear to differ across
three broad categories. Those categories are:

(i) films, works included in films and performances

(ii) employee works, films and performances

(iii) non-employee, non-film works.

Films, works included in films and performances

Consents relating to films, works included in films and
performances can be broad in scope. Such consents may relate
to all or any acts or omissions occurring before
or after the consents are given and may concern specified
existing films, works or performances, or future films,
works or performances of a particular description.

Employee works, films and performances

Similarly, consents relating to employee works, films
and performances may also be broad in scope. They may cover
all or any acts or omissions occurring before or after
the consents are given and may relate to all existing
or future works or films made, or future performances given,
by an employee in the course of their employment.

However, employee consents for non-film works must
also be 'genuinely given'.19

Non-employee, non-film works

By contrast, broad consents may not be validly given in
relation to non-film works which are not made in the course
of an author's employment (such works would include
those produced by contractors). In order to be valid, these
consents must specify the existing or future works and the
particular acts or omissions to which they relate. The
consents must also be 'genuinely given'.

It is unclear precisely how the consent requirements will
be interpreted by courts and how 'specific' consents
will need to be in order to be valid–particularly
those relating to non-employee, non-film works. In view
of this, agencies should aim to obtain moral rights consents
that are as specific as possible.

Moral rights clauses used in agency agreements typically
allow for particular works and acts or omissions to which
a consent relates to be set out in a schedule to the relevant
agreement, and agencies should take care to complete the
schedule item in as much detail as possible.

In addition, given the recent extension of moral rights
protection to performers, agencies should consider whether
their standard moral rights clauses will need to be updated
to cover performances.


'Reasonableness' is the second major defence
to infringement of the moral rights of attribution and
integrity. This defence applies if it was reasonable in
all of the circumstances not to attribute the author or
performer or to subject the work or performance to derogatory
treatment, as the case may be.20 However, the
defence of reasonableness does not apply to the right against
false attribution.

The Copyright Act sets out a non-exhaustive list of factors
to consider in determining whether an act or omission is
reasonable. These factors include the nature and purpose
of the work or performance, the manner or context of use
and the existence of any industry practice. However, none
of these factors should be looked at in isolation–nor
are they the only factors necessarily considered in assessing

Moral rights policies for agencies

In view of the above considerations and the fact that
agencies21 are required to have their intellectual
property (IP) policies in place by 1 July 2008, each agency
should also consider developing a moral rights policy as
part of its IP policy. The moral rights policy could identify
common situations which arise in dealing with copyright
material or performances created by employees and/or contractors
and define a preferred approach to dealing with moral rights
in each of these situations.

The moral rights policy should be circulated amongst employees
and, where applicable, contractors. If an agency then acts
in accordance with its moral rights policy in dealing with
copyright material or performances, it should be better
placed to rely on the defence of reasonableness.

An agency could further strengthen its position by having
its employees and, where appropriate, contractors sign
acknowledgments that they have been made aware of the agency's
moral rights policy. This kind of acknowledgment is already
part of some standard moral rights clauses used in agency

Reliance on the defence of reasonableness could be a fallback
position in circumstances where a written consent is ultimately
held to be invalid by a court.

Future directions

Indigenous communal moral rights

The feasibility of recognising and protecting Indigenous
communal moral rights has been under consideration for
a number of years.

Moral rights protection for Indigenous communities was
on the previous government's legislative agenda.22 The
aim of these reforms was to allow Indigenous communities
to take legal action against inappropriate use of copyright
material which embodies traditional community knowledge
and wisdom. For Indigenous communal moral rights to be
protected, the proposed reforms were stated to require
a voluntary agreement between the creator of the work and
the Indigenous community.23 However, while the
Indigenous Communal Moral Rights Bill was listed for introduction
in last year's sittings of Parliament, it was never
formally introduced.24

Whilst in opposition, the current Labor government indicated
that it would consider implementing the recommendations
of the Report of the Contemporary Visual Arts and Craft
Enquiry25 applying specifically to Indigenous
arts practitioners.26 That report recommends
that action be taken to extend moral rights to Indigenous
groups (recommendation 4). The government also indicated
whilst in opposition that it would respond to the recent
report of the Senate Standing Committee on Environment,
Communications, Information Technology and the Arts entitled Indigenous
Art: Securing the Future–Australia's Indigenous
Visual Arts and Craft Sector.27 This latter
report recommends that 'the government introduce
revised legislation on Indigenous communal moral rights' (recommendation

Interaction with copyright defences

Another area of future interest relates to the potential
interaction between the copyright defences and the defence
of reasonableness under the moral rights regime. For example,
while the copyright defence of fair dealing for the purposes
of parody and satire28 may operate to absolve
a party from liability for copyright infringement, it seems
possible that the same use of the relevant material could
nevertheless infringe an author's moral right of
integrity–subject to the operation of the moral rights
defences of consent and reasonableness.

It will be interesting to observe the extent to which
the establishment of a defence to copyright infringement
or circumstances giving rise to such a defence (including
factors supporting the finding of a 'fair' dealing)
will be considered relevant to establishing the moral rights
defence of reasonableness.


Based on recent moral rights disputes, including the first
successful action for moral rights infringement in Australia,
and the extension of moral rights to performers and possibly
also Indigenous communities, it seems that moral rights
are assuming an increasingly higher profile and potential

It is therefore important for agencies to consider moral
rights when dealing with copyright material even if they
are the copyright owners or licensees of that material
or have a valid defence to copyright infringement, because
moral rights will in all cases remain with the author.
In managing moral rights, agencies will need to have regard
to how they can best employ the two defences to moral rights
infringement of 'consent' and 'reasonableness'.
In particular, they will need to ensure that moral rights
consents obtained, particularly from contractors, are as
specific as possible to increase the prospects that they
will be valid.

As agencies must each have an IP policy in place by 1
July 2008, they should also seek to develop a specific
moral rights policy as part of this process. Developing
and implementing a moral rights policy will assist agencies
to manage moral rights more effectively, and to defend
their use of copyright material as 'reasonable'.

In conclusion, it seems evident that moral rights have
become increasingly important for agencies to consider.
Agencies should accordingly put in place appropriate mechanisms
to ensure effective management of moral rights which will
in turn minimise their risk of liability for infringement.

Rachel Chua is co-leader of AGS's national
Technology and IP network. She regularly advises agencies
on complex legal issues relating to protection and management
of IP, and also acts for agencies in significant IT procurement
and contracting matters. Rachel has a particular interest
in strategic IP management and technology-related legal


  1. This case is discussed further on p 3.
  2. See S Ricketson and C Creswell, The Law of Intellectual
    Property: Copyright, Design & Confidential Information (looseleaf,
    Lawbook Co), para [10.10]; M Sainsbury, Moral Rights
    and their Application in Australia (2003), p 2.
  3. Namely, literary, dramatic, musical and artistic works
    under the Copyright Act.
  4. Prior to these amendments, the original s 190 of the
    Copyright Act imposed a duty not to falsely attribute
    authorship of a work.
  5. World Intellectual Property Organisation, CRNR/DC/95
    (adopted in Geneva on 20 December 1996).
  6. See US Free Trade Agreement Implementation Act
    2004 (Cth). The new rights are the rights of attribution
    of performership, the right not to have performership
    falsely attributed and the right of integrity of performership.
  7. Specifically, the right applies only to actions that
    result in a material distortion or mutilation of, or
    a material alteration to, a performance–it does
    not extend to doing 'anything else' that
    is prejudicial (for example, inappropriate contextual
    treatment). Also, it is only possible to look at prejudice
    to the performer's 'reputation' (as
    opposed to their 'honour or reputation')
    in determining prejudice.
  8. However, the rights of attribution and integrity apply
    only to films produced on or after 21 December 2000.
    In addition, moral rights subsist only in performances
    where the corresponding 'live' performance
    occurred on or after 26 July 2007.
  9. This is usually the life of the author plus 70 years–except
    that the moral right of integrity for films and recorded
    performances continues until the author dies.
  10. See further discussion on pp 4-5. The defence of reasonableness
    does not apply to infringement of the moral right against
    false attribution of authorship.
  11. This article does not consider cases relating to false
    attribution of authorship under the previous s 190 of
    the Copyright Act.
  12. See the National Gallery of Australia website,
  13. Review of the National Museum of Australia, Its
    Exhibitions and Public Programs: A Report to the Council
    of the National Museum of Australia (J Carroll,
    R Longes, P Jones and P Vickers-Rich, 2003).
  14. See the National Museum of Australia website at
  15. G Safe, 'All's not well in the garden
    of dreams', Weekend Australian, 19 July
  16. E Farrelly, 'Genius doesn't mean pleasure', Sydney
    Morning Herald, 11 November 2003.
  17. Ibid.
  18. Ibid.
  19. It is not clear how this requirement differs from
    the requirement that a consent cannot be obtained by
  20. 'Derogatory treatment' is quite a broad
    concept which potentially encompasses any alteration
    to a work, or use of a work in a context different to
    that originally envisaged, which the author considers
    to be predjudicial to their honour or reputation. Such
    treatment could nevertheless be reasonable depending
    on the circumstances–for example, in the case of
    relatively minor editorial alterations or reproduction
    of an excerpt for the purposes of literary criticism.
  21. Specifically, the agencies affected are those subject
    to the Financial Management and Accountability Act
  22. An exposure draft of the Copyright Amendment (Indigenous
    Communal Moral Rights) Bill 2003 was distributed for
    comment on a confidential basis to a limited number of
    stakeholders in December 2003. Amendments were made last
    year to streamline and simplify the bill.
  23. Senator the Hon R Alston, the Hon D Williams MP and
    the Hon P Ruddock MP, 'Indigenous communities to
    get new protection for creative works', joint media
    release, 19 May 2003.,,0_4-2_4008-4_114525,00.html
  24. See 'Legislation proposed for introduction in
    the 2007 Autumn sittings' (…);
    and 'Legislation proposed for introduction in the
    2007 Spring sittings', from the Parliament House
    of Australia website.
  25. Report of the Contemporary Visual Arts and Craft
    Enquiry (R Myer (Chairman), 2002):
  26. Federal Labor Arts Policy Discussion Paper (30
    July 2006):
  27. June 2007. See also the Official Newsletter of
    the Australian Indigenous Art Trade Association,
    November 2007.
  28. Copyright Act, s 41A.

Kenneth Eagle

Kenneth Eagle Senior Executive Lawyer
T 03 9242 1290
F 03 9242 1481


On 28 May 2007, the Australian Government Information
Management Office (AGIMO) of the Department of Finance
and Administration released Version 2 of the SourceIT model
contracts and user notes. The purpose of this article is
to provide a brief summary of the approach the model contracts
take to intellectual property issues.


The SourceIT model contracts were first issued on 31 May
2006 in response to a review of the Government Information
Technology Contracting (GITC) templates conducted by AGIMO
in 2005. This review showed that, while there were some
problems with the GITC documents, there was strong interest
among agencies in the existence of a suite of model ICT
contracts. Following the issue of Version 1 of the SourceIT
model contracts, further consultation and review of the
documents was undertaken, and Version 2 was issued on 28
May 2007.

Use of the SourceIT model contracts is not compulsory;
however, AGIMO encourages both Financial Management
and Accountability Act 1997 (FMA Act) and Commonwealth
Authorities and Companies Act 1997 (CAC Act) bodies
to use the model contracts for simple ICT procurements.1 In
relation to more complex ICT procurements, AGIMO advises
that GITC4 can continue to be used as the basis for developing
the contracts.2

SourceIT model contracts

There are four SourceIT model contracts and each is accompanied
by separate user notes. They are:

  • ICT Consultancy Services Contract
  • Licence Contract–Commercial Off The Shelf (COTS)3 Software
  • Licence and Support Contract–COTS Software
  • Hardware Acquisition and Maintenance Contract.


The SourceIT model contracts contain a number of standard
defined terms, with common or at least similar definitions
across all model contracts. These definitions reflect terms
that are commonly used in many contracts and other templates
that may be used by an agency. As with any template document,
it is important that the definitions are carefully reviewed
prior to using a SourceIT model contract; while the term
itself may be one that agency personnel are familiar with,
there may well be subtle (or not so subtle) differences
in the wording of the definition. It is important that
the exact scope of a defined term is understood, as this
will obviously have a significant impact on the meaning
and operation of the operative clauses in which the term
is used.

Some issues that agencies should note in relation to the
defined terms are as follows:4

  • The definition of 'Intellectual Property Rights' does
    not include a reference to confidential information or
    confidential material. This is appropriate, as the term
    is used in clauses dealing with the ownership of or the
    right to use an asset, whereas confidential information
    is concerned with the disclosure of information, independent
    from who may own any intellectual property rights in
    material that contains the confidential information (there
    are separate clauses dealing with confidentiality).
  • The term 'Contract Material' covers Material
    created by the Contractor for the purpose of or as a
    result of performing its obligations under the Contract.
  • The term 'Auxiliary Material' deals with
    Material 'made available' by a party for
    the purposes of the relevant Contract. In many contracts,
    the term 'Background Material' is used to
    describe this concept.
  • 'Customer Material' refers to Auxiliary
    Material that is provided by the Customer (that is, the
    agency). The definition includes a reference to the list
    of this Material that is to be included in the Contract
    Details. It is important to note that this list is not
    exhaustive: it is not necessary for the Material to be
    included in this list for it to fall within the scope
    of the definition.
  • The term 'Third Party Material' covers
    Auxiliary Material in which a third party holds the Intellectual
    Property Rights.

As noted above, it is important that agencies carefully
review these definitions before using the SourceIT model
contracts. In particular, the scope of and interaction
between Contract Material, Auxiliary Material, Customer
Material and Third Party Material should be clearly understood.

ICT Consultancy Services Contract

The ICT Consultancy Services Contract provides for two
ownership models. Under one, the Customer (that is, the
agency) will own the Intellectual Property Rights in the
Contract Material.5 Under the other, the Contractor
will own the Intellectual Property Rights in the Contract
Material. The selection of the model that will apply is
achieved by including the appropriate detail in the Contract
Details. If no selection is made in the Contract Details,
the default position is that the Customer will own the
Intellectual Property Rights in the Contract Material.

Under both models, ownership of Intellectual Property
Rights in Auxiliary Material is not affected. However,
the Contractor is required to grant or arrange licensing
of Auxiliary Material (including any Third Party Material)
provided by the Contractor 'to the extent that the
Customer needs to use the Auxiliary Material to get the
full benefit of the Services, including the Contract Material'.
While this licence allows for sublicensing, it does not
allow for the 'exploitation' of the Auxiliary
Material 'for commercial purposes' by the Customer.

Where the Customer is to own Intellectual Property Rights
in the Contract Material, the Contractor is licensed to
use the Contract Material and any Customer Material (including
any Third Party Material contained in the Customer Material)
for the purpose of performing the Services. It will be
important that the agency ensures that it is able to provide
such a licence in relation to any Third Party Material
contained in the Customer Material prior
to providing it to the Contractor.

Where the Contractor is to own Intellectual Property Rights
in the Contract Material, the Customer's licence
of the Contract Material is on the same terms as the Auxiliary
Material provided by the Contractor–that is, 'to
the extent the Customer needs to use the Material to obtain
the full benefit of the Services'–and it is
subject to the same restriction concerning commercial exploitation.
Importantly, the Contractor's right to use Customer
Material is still only for the purpose of performing the
Services. In some situations, the Contractor may seek a
broader or longer-term licence of Customer Material: for
example, where this would enhance its ability to exploit
the Contract Material with other Customers. Care should
be taken when considering such a request, particularly
where Third Party Material is involved.

Licence Contract–COTS Software

As the name suggests, the Licence Contract–COTS
Software is a licence agreement, so ownership of the Intellectual
Property Rights in the Software is retained by the Contractor.
The licence covers the use of the Software on the 'Existing
System' by the 'specified users' and
at the 'specified sites' (details of these
terms are to be included in the schedule). The licence
is more limited than under the ICT Consultancy Services
Contract discussed above. In particular, adaptation of
the Software is allowed only to the extent that it is necessary
to use the Software on the Existing System. The licence
covers any Documentation that is associated with the Software.
It also addresses making additional copies of the Software
and Documentation for backup and security purposes.

As drafted, the Licence Contract–COTS Software provides
for an irrevocable licence. If this is amended during contract
negotiations, agencies should ensure that they carefully
consider the issue of survivorship: will the agency need
an ongoing licence for the purpose of maintaining backup
copies? The Licence Contract–COTS Software also explicitly
refers to assignment of the licence where there is a change
in the Administrative Arrangements Orders. Interestingly,
this reference covers only the licence that is granted
under the Licence Contract; it is not a 'general
novation' clause and does not cover all of the rights
and obligations under the Licence Contract. Agencies should
consider whether a more general clause would be more appropriate.6

The Licence Contract–COTS Software provides for
the licence to be extended to the Customer's contractors
(where this is specified in the schedule) and also extends
to a third party provider of IT support services where
this function has been outsourced by the Customer.

Other important features of the Licence Contract–COTS
Software include:

  • a prohibition on 'reverse engineering'
  • a requirement for the Customer to take 'reasonable
    care' to prevent unauthorised use
  • a requirement on the Customer to maintain a log of
    the number and location of any copies of the Software
  • a right for the Contractor to conduct annual audits
    of use.

It is important to note that the Licence Contract–COTS
Software does not deal with updates, improvements, modifications
or new releases, nor does it include any requirement for
the source code to be held in escrow or otherwise to be
available to the Customer. These issues, however, are covered
in the Licence and Support Contract–COTS Software.

Licence and Support Contract–COTS Software

The scope of the licence granted under the Licence and
Support Contract–COTS Software is broadly similar
to that discussed above in relation to the Licence Contract–COTS
Software. However, there are some differences. The licence
in favour of the Customer is limited to use that is 'solely
for the benefit of the Customer'. Another difference
is that the Contractor is required to provide 'reasonably
required assistance' to any outsourced provider of
IT support services to the agency at no extra cost. Depending
on what level of assistance is going to be required in
a particular case, it may be worth clarifying (both with
the Contractor and the outsourced provider) exactly what 'reasonable
assistance' is to be provided.

As the name suggests, this model contract covers the support
of the Software by the Contractor. It also contains provisions
dealing with the placement of source code in escrow, with
the option of using the Contractor's own escrow arrangements.
The Licence and Support Contract–COTS Software also
deals with the provision of updates and new releases. Importantly,
while there is a requirement on the Contractor to provide
the Customer with details of any updates or new releases,
there is no obligation on the Customer to 'take up' a
new release. Any decision not to take up a new release
does not affect the Contractor's obligation to continue
to provide the support services. Care should be taken when
considering any amendments to these provisions if they
are proposed by a potential Contractor. If a new release
is taken up by the Customer, there is an obligation on
the Customer to destroy any superseded versions when they
are 'no longer required'. This concept is not
further defined: a significant issue here is the extent
to which superseded versions may be required for backup
or archive retrieval purposes.

Hardware Acquisition and Maintenance Contract

The Hardware Acquisition and Maintenance Contract covers
the sale and purchase of Hardware; it does not cover the
leasing of Hardware. The obligation is on the Contractor
to deliver and install the Hardware. The Hardware Acquisition
and Maintenance Contract also contains provisions dealing

  • Acceptance Testing
  • remediation of problems
  • a Warranty Period of 90 days
  • the provision of Maintenance Services during the Support

The Hardware Acquisition and Maintenance Contract also
provides for the implementation of 'engineering changes' and
upgrades. In a similar way to the arrangements set out
in the Licence and Support Contract–COTS Software,
the Customer is not obliged to take up an upgrade, unless
it is 'classified by the manufacturer as mandatory
for safety reasons'. And, as with the Licence and
Support Contract–COTS Software, a decision by the
Customer to not take up a non-mandatory upgrade does not
affect the obligation on the Contractor to provide Maintenance
Services. This can be overridden in the Contract Details,
and any proposal by a potential Contractor in this regard
should be carefully considered.

The provisions dealing with intellectual property are
similar to those contained in the ICT Consultancy Services
Contract except that the assumption is that the Contractor
will own any Intellectual Property Rights in Contract Material.
The Customer is licensed to use the Contract Material and
Auxiliary Material 'to obtain the full benefit' of
the Deliverables (that is, the Hardware and any associated
Documentation and so on). The Customer is entitled to sublicense
these rights; however, the Customer's licence does
not extend to 'exploitation for commercial purposes'.


The SourceIT model contracts are intended for use in simple
ICT procurements. The model contracts would not be appropriate
for more complex or highly integrated procurements, where
there is likely to be a significant amount of customisation,
or where it is proposed that hardware is to be leased.
While use of the model contracts is not compulsory, AGIMO
encourages all FMA Act and CAC Act bodies to use them.

As with any template, agencies should carefully review
a model contract before using it, to ensure they fully
understand its scope and operation. This careful approach
should also be taken in relation to any amendments that
may be proposed by a potential contractor.

Kenneth Eagle practises in the areas
of commercial law, including competitive tendering and
contracting, contract draft-ing, risk allocation and
management, as well as intellectual property, including
technology development and licensing agreements. In addition,
he has gained expertise in handling complex legal issues
and processes through his involve-ment in major privatisation
and corporatisation projects.


    AGIMO advises that GITC4 is being reviewed and indicates
    that it is possible that additional model contracts will
    be developed as part of the SourceIT suite. It is also
    important to note that the current version of GITC4 does
    not address some of the more recent Commonwealth procurement
    policy developments (for example, the cessation of the
    Endorsed Supplier Arrangements). Care should therefore
    be taken when using the existing GITC4 documentation.
  3. COTS refers to products that are generally available
    from the relevant vendor rather than a product that is
    being purpose-built or developed by the vendor.
  4. Using the terms as defined in the ICT Consultancy
    Services Contract. These definitions are broadly consistent
    across the model contracts; however, there are some differences.
  5. There are a number of issues that should be considered
    when deciding which ownership model is appropriate. Discussion
    of these issues is beyond the scope of this article.
    For a discussion of the Commonwealth policy on intellectual
    property ownership (among other things), refer to:
  6. Although note the possible application of s 19C of
    the Acts Interpretation Act 1901 (Cth) in this
    context. This section provides for references to a particular
    department in an agreement to be taken to be references
    to another department where that other department takes
    over the functions of the original department in relation
    to the subject matter of the relevant agreement.

Adrian Snooks

Adrian Snooks Senior
Executive Lawyer
T 02 6253 7192
F 02 6253 7306


This article looks at a range of practical options that
Australian Government agencies can use to protect their
confidential information, particularly when seeking to
commercialise agency-owned intellectual property.

Confidentiality arrangements

The common law provides protection for confidential information
in some cases where an equitable action for breach of confidence
can be found. This has limitations and, with respect to
the protection of government information, includes a requirement
that any disclosure must have been contrary to the public

A more precise and effective way to protect confidential
information is to utilise an appropriate combination of
legally binding confidentiality obligations: in other words,
a confidentiality agreement. Confidentiality agreements
provide the opportunity for parties to unambiguously determine
the scope and nature of the information which is to be
protected, any special measures and procedures to be used
to secure the information, and the consequences for unauthorised
release of that information.

Why is it important to protect government intellectual
property from disclosure?

Government intellectual property–for example, the
source code in a software program that has been developed
by or for an agency and in which that agency owns the relevant
intellectual property rights–can potentially have
significant commercial value. If government does not protect
this source code from disclosure then third parties may
attempt to copy and exploit it, thereby denying government
the opportunity to derive royalties or other benefits from
the commercial use of that intellectual property.1

In some circumstances, the value of government intellectual
property can be very significant. For example, in the Ordnance
Survey case, which is discussed at the end of this article,
the value of maps produced by Ordnance Survey (a UK government
business entity) and later adapted for use by a commercial
organisation in that organisation's own products
amounted to many tens of millions of dollars.

Hogwarts Confidential

It is worth noting that confidentiality arrangements would
not necessarily be the only line of defence in securing
the confidentiality of specific agency information. An
example of the breadth of arrangements that could be put
in place to protect confidential information is given by
the publication and distribution of the book Harry Potter
and the Deathly Hallows.2 The publishers
had arranged for a worldwide synchronised release of the
book on 21 July 2007 and had published and distributed
millions of copies to distributors and retailers. In order
to achieve maximum impact, the publishers needed to ensure
that copies were not leaked prior to the release date.
To do this, they put in place a highly elaborate security
operation, which, according to new reports, included:

  • contracts with distributors and retailers involving
    strict confidentiality provisions
  • confidentiality undertakings from the publisher's
    own employees
  • 24-hour security around published editions of the
  • satellite tracking of distribution vehicles to ensure
    that there was no deviation from assigned delivery routes
  • secure storage precautions, including alarmed pallets
  • the threat that lawyers were ready to pounce on anyone
    who breached an agreement.

Despite this protection, the book was scanned in its entirety
and posted on the internet a number of days prior to its
release. Given the sheer number of copies printed, perhaps
the biggest surprise is that it was not leaked sooner.
So the question is: at what point did the confidentiality
procedures break down? Was it at the publishing stage–where
it is rumoured that publishing staff had to work in semi-darkness
to avoid obtaining vital clues about the plotline of the
book–or was it at the distribution stage? Perhaps
a copy 'disapparated'3 from a satellite-tracked
van to an accomplice on a street corner?

As it turns out, what allegedly happened is that, despite
all of the books being packed in boxes which were marked 'Do
not distribute before 21 July 2007', two US distributors
accidentally sent the book out early. When the mistake
was realised, the US distributors asked the 1,200 readers
who had received their copy early to kindly put the book
aside and not read it until 21 July 2007. Not surprisingly,
this request was ignored by at least some of the readers–so
the lawyers duly pounced and litigation was commenced by
the publishers to sue the distributors in question for
breach of their confidentiality agreements.

This example demonstrates the following:

  • There is a wide range of possible methods for protecting
    confidential information.
  • Such methods can be used in conjunction or layered
    to provide additional protection.
  • These methods can be surprisingly effective. Given
    the massive number of copies published and distributed
    in the Harry Potter case, it appears that an accidental
    mistake rather than a deliberate breach led to the breakdown
    in confidentiality.

In order to provide an overview of how such methods can
be used by agencies, this article returns to the situation
where an agency owns the intellectual property in a software
program, has identified the potential commercial value
of the software and intends to seek a commercialisation
partner to further develop and commercialise that software.

A possible structure for protecting the confidential intellectual
property embodied in the software is as follows:

  • If the agency is going out to tender for a commercialisation
    partner, it should require that the download of the tender,
    or the component of the tender relating to the confidential
    information, be contingent on the potential tenderer
    signing a deed of confidentiality.
  • Once a preferred tenderer is selected, it should ensure
    that the contract with the tenderer includes robust confidentiality
  • It should require confidentiality deeds to be provided
    by personnel of the contractor and subcontractors who
    are likely to obtain access to the information.

Confidentiality agreements

A good confidentiality agreement, whether it forms part
of a contract or is a stand-alone agreement, should first
define the information that needs to be held confidential.
It is critical that this confidential information be specified
as accurately and in as much detail as possible. That is
a requirement of Commonwealth confidentiality policy4 and
it also improves the chances that truly confidential information
is recognised and properly protected.

The agreement should also, in respect to the Commonwealth's
confidential information:

  • include the purpose for which the commercialisation
    partner may use the confidential information (for example,
    that the commercialisation partner may only use the agency's
    confidential information for the purposes of evaluating
    commercialisation prospects)
  • impose a non-disclosure obligation on the commercialisation
    partner such that the partner is not permitted to disclose
    information except as allowed under the agreement
  • set out the consequences of a failure to comply, including
    the potential for breach of Part 10.7 of the Criminal
    Code Act 1995 or breach of ss 70 and 79 of the Crimes
    Act 1914. There may also be agency-specific legislation
    that imposes sanctions for disclosure of the agency's
    confidential information
  • include a requirement on the commercialisation partner
    to arrange for the provision of confidentiality undertakings
    from its personnel, including subcontractors and their
    personnel. This requirement can be linked to a template
    confidentiality undertaking attached to the agreement;
    this makes it legally and administratively easier to
    get the rights that the agency wants rather than having
    to negotiate an appropriate agreement after the contract
    is signed when the agency has less bargaining power
  • include a requirement to report any breach of the
    agreement to the agency.

Other optional inclusions are:

  • an uncertainty clause that requires the commercialisation
    partner to seek approval from the agency if it is uncertain
    as to whether a particular set of information is confidential.
    This more squarely places the onus on the partner to
    carefully consider whether information it is provided
    with is confidential
  • requiring the commercialisation partner to limit the
    release of agency confidential information within the
    partner's organisation on a need-to-know basis.
    This could be achieved through the partner providing
    a list of nominated personnel to whom access may be granted.
    It could then be approved by the agency and updated as
    necessary. It need not be limited solely to the commercialisation
    partner but could also include employees of subcontractors
    or related entities. This is a particularly valuable
    method to use where the partner organisation is large
    or where there are a multitude of related companies that
    may require access to the information in order to commercialise
    the intellectual property
  • imposing obligations requiring the partner to ensure
    that its nominated personnel have been informed of the
    confidential information that requires protection or
    even trained in how to ensure that information is not
    used contrary to the agreement with the agency for particularly
    sensitive information
  • other specific measures to protect the confidential
    information against disclosure, such as limits on the
    number of copies or a requirement to store the information
    in a particular way (for example, in lockable secure
    storage cabinets or on encrypted electronic media).

AGS has recently finalised a major update of our commercial
template agreements. They include a new drafting approach
that involves dealing with confidentiality of Commonwealth
information as part of the security clause. The advantage
of this approach is that it provides a clean and simple
way of dealing with two very closely related subjects–as
can be seen in the Harry Potter example earlier, where
security and confidentiality measures are brought together
to maximise protection of information.

Individual confidentiality undertakings

If the agency seeks additional protection, then it could
activate the requirement on the commercialisation partner
to obtain confidentiality agreements from those of its
personnel (including employees and subcontractors) with
access to the protected information. An organisation's
employees are not a party to any confidentiality agreement
that the organisation may enter into with the agency. The
same goes for subcontractors and the employees of subcontractors
as well as the employees of subsidiary and holding companies
for the commercialisation partner. The contract itself
would not be able to impose any direct penalty on the employees
for releasing confidential intellectual property information
belonging to the agency. So, if it is considered important
to fully protect the agency's intellectual property,
the agency may wish to consider entering into confidentiality
arrangements with nominated personnel.

The purpose of entering into these arrangements with nominated
personnel is not primarily so the agency can take direct
action against or sue individuals (as this is highly unlikely
in practice) but, rather, to act as a clear reminder to
those individuals of their responsibilities to protect
the confidentiality of the agency's intellectual
property that they may see. This method can be highly effective
when used in conjunction with a confidentiality agreement
with the commercialisation partner. The element of personal
responsibility that is missing from the agreement with
the partner is provided through the agreements with the

Nevertheless, from a policy perspective, agencies may
want to use such agreements sparingly in order to maximise
their effect when they are required. Also, some commercial
organisations may object to their staff being required
to sign confidentiality deeds.5 As a general
point–both to underline the personal responsibility
emphasis of the deeds and to minimise resistance from commercial
organisations–it is usually not necessary for such
agreements to include indemnities for breach. Indemnities
should be restricted to the agreements with the commercialisation

The content of such undertakings would otherwise be similar
to those of the agreement with the partner, and would need
to be drafted in a way that complements and is consistent
with the partner-level confidentiality agreement. For example,
personnel of the commercialisation partner may in some
cases need only to acknowledge a specific obligation that
the partner has rather than having an obligation to do
that thing themselves.

Given the focus on personal responsibility, however, it
would be useful and relevant to point out in such undertakings
the applicable legislative provisions (the Criminal Code
Act, the Crimes Act and any relevant agency legislation)
that may be applicable to any breach of confidentiality.

Using a layered approach which includes confidentiality
agreements with a commercial party and individual undertakings
from that party's personnel and subcontractors allows
an agency to set up a strong level of protection for its
confidential information.

While there are obviously other ways in which to protect
information (for example, various security requirements)
there is not space in this article to go into detail. However,
a final example will suffice to demonstrate an alternative
way of protecting intellectual property. In this example,
it was not so much a matter of maintaining information
as confidential but ensuring that unauthorised copying
of that information was easy to detect.

This matter involved alleged copyright infringement of
a range of maps produced by Ordnance Survey–a UK
government agency tasked with a range of mapping and survey
functions. Ordnance Survey staff detected what they considered
to be suspiciously similar maps being produced by the British
Automobile Association (AA). They suspected that AA had
been copying Ordnance Survey maps and using them as part
of AA's street directories and other commercial mapping
publications. AA initially denied this, claiming that the
maps were its own development and its own intellectual
property. AA was subsequently taken to court by Ordnance
Survey, which alleged that AA had copied more than 500
of its maps and published more than 300 million copies
of those maps.

It turned out that Ordnance Survey had introduced deliberate
errors into its maps as a type of copy protection: for
example, non-existent kinks in streams, missing apostrophes
in place names, a few extra buildings here and there, exaggerated
curves in minor roads and so on. Ordnance Survey alleged
that the same errors arose in the AA maps.

Following evidence provided by Ordnance Survey, AA entered
into an out-of-court settlement with Ordnance Survey that
reportedly involved the payment of approximately $50 million
by AA to Ordnance Survey and the ongoing licence of Ordnance
Survey maps to AA for an annual licensing fee.6 This
example clearly demonstrates the amount of money that government
intellectual property potentially can be worth and therefore
the need to ensure appropriate protection in order to properly
protect government assets.

The type of approach taken by Ordnance Survey could have
application if it is worked into the intellectual property
itself (for example, into the source code of a software
product) as a way of detecting a breach of a confidentiality
agreement. After all, it is one thing to have an agreement
and another thing entirely to be able to prove the breach
of that agreement.


Confidentiality agreements offer a flexible, precise and
effective way to protect sensitive Australian Government
information. As this information can have considerable
commercial value, it is important for agency personnel
to consider how information under the control of the agency
can best be protected from disclosure. Special attention
should be paid to this issue in situations which give rise
to a higher risk of improper disclosure: for example, where
an agency is seeking to commercialise its own intellectual
property. Layering protection (for example, through the
use of a corporate confidentiality agreement with a commercialisation
partner supported by confidentiality undertakings from
the individual personnel of that partner) can provide an
effective defence against disclosure if appropriately drafted.

Adrian Snooks has considerable experience
in intellectual property law and commercial drafting.
He has advised on some of the largest procurements of
technology by the Australian Government and has worked
in the field of intellectual property and technology
law in both the UK and Australia.


  1. In this example, the agency's copyright in the
    source code would still be owned by the agency; however,
    failing to protect that source code from disclosure would
    make it difficult practically for the agency to enforce
    its intellectual property rights.
  2. JK Rowling, Harry Potter and the Deathly Hallows (Bloomsbury
    Publishing, London, 2007).
  3. Or, in Muggle terminology, 'teleported'.
  4. See the Department of Finance and Administration's 'Guidance
    on Confidentiality in Procurement', available at
  5. They may object for a variety of reasons (for example,
    the personnel may already be bound by obligations of
    confidentiality even without the deed).
  6. See the Ordnance Survey press release at

Guidance on developing an IP policy

The AGS 2008 Intellectual Property (IP) Forum will
be held in Canberra on Wednesday, 30 April 2008.
Speakers at the forum will discuss issues relating
to the development of IP management policies, which
agencies are required to have in place by 1 July

The AGS website also contains important resources
for agencies developing IP policies. AGS Special
Counsel Philip Crisp's paper 'A methodology
for developing an agency IP policy' contains
some of the basics of IP law and practice and presents
a methodology for undertaking a strategic IP management
review leading to the development of an IP management
policy. The paper contains links to an IP survey
questionnaire, a template for an IP Register and
other useful resources.

In addition, AGS's IP forum case studies provide
food for thought on current IP issues of broad interest.

The paper and case studies can be found at

AGS contacts

AGS has a national team of lawyers specialising in advising
agencies on a wide range of intellectual property (IP)
and technology matters, including establishing agency-specific
IP policies, managing IP in connection with specific transactions
and initiatives, and handling IP disputes. For assistance
with any IP matters, please contact one of our national
Technology and IP network leaders, Philip Crisp, Rachel
Chua or Tony Beal, or one of our specialist IP lawyers
listed below.

Philip Crisp

Philip Crisp Special Counsel, Commercial
T 02 6253 7159
F 02 6253 7306

Rachel Chua

Rachel Chua Senior Executive Lawyer
T 02 6253 7086
F 02 6253 7306

Tony Beal

Tony Beal Special Counsel, Commercial
T 02 6253 7231
F 02 6253 7306


Adrian Snooks

02 6253 7192


John Berg
Kate Brophy

02 9581 7624
02 9581 7678


Kenneth Eagle
Paul Lang
Simon Anderson

03 9242 1290
03 9242 1322
03 9242 1260


Peter Blennerhassett

07 3360 5767


Scott Slater

08 9268 1789


Andrew Schatz

08 8205 4201


Peter Bowen

03 6210 2104


James Docherty

08 8943 1405

ISSN 1443-9549 (Print)
ISSN 2204-6550 (Online)

The material in these notes is provided to AGS clients
for general information only and should not be relied
upon for the purpose of a particular matter. Please
contact AGS before any action or decision is taken
on the basis of any of the material in these notes. © AGS
All rights reserved