Electronic Files and Ownership of Documents Protection against improper use of documents Willis HRH A&E presents: Willis HRH A&E D I F F E R E N T B Y D E S I G N®

Willis HRH D I F F E R E N T B Y D E S I G N® Learning Objectives  Identify where the risks lie  Compare risks and rewards  Discuss copyright and liability allocation  Overview of risk management techniques  Comparison of AIA and EJCDC documents  Sample contract language  Understand risks associated with  Apply principles to BIM

Willis HRH D I F F E R E N T B Y D E S I G N® History of CAD  CAD was created to improve productivity –Re-use standard details –Perform on-line interactive design and drafting –Make modifications easily

Willis HRH D I F F E R E N T B Y D E S I G N® Electronic File Risks  Productivity tool now used as a medium of exchange and for archiving  Electronic files can expose the firm to claims by clients and third parties who rely on them  Electronic files can be used for unintended purposes  Electronic files can be altered  Electronic files can degrade

Willis HRH D I F F E R E N T B Y D E S I G N® Electronic File Risks  Electronic files can be incompatible with the recipient’s system  The wrong file can be transferred  Rights to use not transferred with the file  CAD files were not designed for contractor use  CAD in the implementation of facilities management  Unrealistic client expectations regarding cost and scheduling

Willis HRH D I F F E R E N T B Y D E S I G N® Copyright Risks  Protect compensation by limiting permitted use  Limit liability exposure by limiting permitted use

Willis HRH D I F F E R E N T B Y D E S I G N® Product Liability  Professionals provide a service, not a product  Mass production exposes the firm to products liability claims  Product liability is strict liability  Warranties attach to the sale of products under the Uniform Commercial Code

Willis HRH D I F F E R E N T B Y D E S I G N® Product Liability Insurance  Products liability is not covered by a professional liability policy  Client customized programs are covered by the professional liability policy  Product liability falls under the general liability policy

Willis HRH D I F F E R E N T B Y D E S I G N® CAD Deliveries From Client  Digital terrain models, existing conditions, data from a previous phase, etc.  Who is responsible for any needed cleanup?  Are sample files available for checking before the agreement and fee are finalized?

Willis HRH D I F F E R E N T B Y D E S I G N® CAD Deliveries to Client  Why does the Client want CAD files and how does he/she plan to use them?  Are CAD files required only with final submittal, or intermediate submittals as well?  What CAD software must the submitted files match?  What CAD specifications must be used?

Willis HRH D I F F E R E N T B Y D E S I G N® Transfer of Files to Contractors  Does the design professional have the legal right to transfer electronic files if the information is owned by the client under the contract or operation of law?  Does the contractor have a right to sue the design professional under the transfer agreement or the argument of detrimental reliance?  Is the design professional providing a service for the benefit of the contractor?

Willis HRH D I F F E R E N T B Y D E S I G N® CAD Deliveries Between Consultants  Who is responsible for usability and accuracy of Subconsultants electronic files?  Are Subs using the same CAD system?  Who is responsible for any translations?

Willis HRH D I F F E R E N T B Y D E S I G N® Who Should Bear The Risks?  The transfer of electronic files benefits the recipient  The sender assumes liability exposure by transferring files, but gets little compensation, if any  It is appropriate that the risks should be balanced by allocating them to the one who controls the risk and benefits most from the risk

Willis HRH D I F F E R E N T B Y D E S I G N® Copyright Options  A limited license for the Client’s use  Transfer of ownership of the instruments of service  Transfer of copyrights

Willis HRH D I F F E R E N T B Y D E S I G N® Managing Electronic File Transfer Risks  State that electronic files are instruments of service for the client’s sole use on the project  Electronic files are for a specific use  No representation of suitability for other purposes, or durability of the media  The signed and sealed documents govern  Retain a hard copy of all transmitted files  Strip title blocks and electronic seals  Keep a log of transmittals

Willis HRH D I F F E R E N T B Y D E S I G N® Key Contract Issues  Define deliverables  CAD files are instruments of service  Ownership of CAD files  Right to edit CAD files  The CAD specification

Willis HRH D I F F E R E N T B Y D E S I G N® Key Contract Issues  Acceptance period  Allocation of liability  Compensation  Archiving  Subconsultant consistency  Valuable papers insurance

Willis HRH D I F F E R E N T B Y D E S I G N® Goals  Retain ownership of electronic files for the Consultant, like the Consultant now retains ownership of drawings.  If ownership is transferred, define ownership and responsibilities  Limit the ways electronic files can be used  Indemnify the Consultant for all uses other than the purpose identified in the agreement, and any purpose after acceptance period

Willis HRH D I F F E R E N T B Y D E S I G N® Goals  Protect the Consultant from changes to the content or scope of the electronic files  Reach an understanding of the impact of CAD delivery requirements on cost and schedule  Adequate compensation for the service provided and value added

Willis HRH D I F F E R E N T B Y D E S I G N® Goals  Promote the exchange of CAD files between parties who agree: –What each party is to deliver –What are the scope and limitations of the electronic files –How risks are allocated between the parties

Standard Association Agreements The AIA and EJCDC documents

Willis HRH D I F F E R E N T B Y D E S I G N® 1997 AIA B141  Subparagraph states the following: Prior to the Architect providing to the Owner any Instruments of Service in electronic form or the Owner providing to the Architect any electronic data for incorporation into the Instruments of Service, the Owner and the Architect shall by separate written agreement set forth the specific conditions governing the format of such Instruments of Service or electronic data, including any special limitations or licenses not otherwise provided in this Agreement.

Willis HRH D I F F E R E N T B Y D E S I G N® 1997 AIA B141  The Architect retains all rights of ownership in the Instruments of Service, including all copyrights. However, Paragraph of the Agreement grants the Owner a non-exclusive license to reproduce documents for constructing, using and maintaining the Project.  This license is void if the Owner fails to comply with the obligations of the agreement, including the obligations to make payments when due.

Willis HRH D I F F E R E N T B Y D E S I G N® AIA B511  Guide for Amendments to AIA Owner-Architect Agreements  Has suggestions for modifications to the AIA's standard owner- architect agreement forms

Willis HRH D I F F E R E N T B Y D E S I G N® AIA B511  The Owner shall not use or authorize any other person to use the Drawings, Specifications, electronic data and other Instruments of Service on other projects, for additions to this Project or completion of this Project by others so long as the Architect is not adjudged to be in default under this Agreement. Reuse without the Architect's professional involvement will be at the Owner's sole risk and without liability to the Architect. The Owner shall indemnify and hold harmless the Architect, Architect's consultants, and agents and employees of any of them from and against claims, damages, losses and expenses, including but not limited to attorneys' fees, arising out of unauthorized reuse of Drawings, Specifications, electronic data or other Instruments of Service.

Willis HRH D I F F E R E N T B Y D E S I G N® EJCDC Section 6.04  In Paragraph 6.04 the documents are identified as instruments of service and the ownership and property interests of the design professional are defined.  Electronic information is provided "only for the convenience“ of the client  The design professional disclaims any representations as to "long term compatibility, usability, or readability of documents" when they are transferred to the client in electronic media format  There is an acceptance period  There is an indemnity for unauthorized reuse.

Willis HRH D I F F E R E N T B Y D E S I G N® ECJDC  Such documents are not intended or represented to be suitable for reuse by Owner or others on extensions of the Project or on any other project. Any such reuse or modification without written verification or adaptation by Engineer, as appropriate for the specific purpose intended, will be at Owner's sole risk and without liability or legal exposure to Engineer or to Engineer's Consultants. Owner shall indemnify and hold harmless Engineer and Engineer's Consultants from all claims, damages, losses, and expenses, including attorneys' fees arising out of or resulting therefrom.

Willis HRH D I F F E R E N T B Y D E S I G N® EJCD  6.04.D Because data stored in electronic media format can deteriorate or be modified inadvertently or otherwise without authorization of the data's creator, the party receiving electronic files agrees that it will perform acceptance tests or procedures within 60 days, after which the receiving party shall be deemed to have accepted the data thus transferred. Any errors detected within the 60-day acceptance period will be corrected by the party delivering the electronic files. Engineer shall not be responsible to maintain documents stored in electronic media format after acceptance by Owner

Willis HRH D I F F E R E N T B Y D E S I G N® EJCD  6.04.E When transferring documents in electronic media format, Engineer makes no representations as to long term compatibility, usability, or readability of documents resulting from the use of software application packages, operating systems, or computer hardware differing from those used by Engineer at the beginning of this Project.

Willis HRH D I F F E R E N T B Y D E S I G N® EJCDC  The client gets the right to keep and make copies of the documents for information in connection with the use of the project  6.04.G If there is a discrepancy between the electronic files and the hard copies, the hard copies govern.

The Client Agreement Ownership of Copyrights and Instruments of Service

Willis HRH D I F F E R E N T B Y D E S I G N® Ownership of Instruments of Service (strongest position)  All reports, drawings, specifications, computer files, field data, notes and other documents and instruments prepared by the Consultant as instruments of service shall remain the property of the Consultant. The Consultant shall retain all common law, statutory and other reserved rights, including the copyright thereto.

Willis HRH D I F F E R E N T B Y D E S I G N® Ownership of Instruments of Service (balanced approach)  The Client acknowledges the Consultant's construction documents, including electronic files, as instruments of professional service. Nevertheless, the final construction documents prepared under this Agreement shall become the property of the Client upon completion of the services and payment in full of all monies due to the Consultant.

Willis HRH D I F F E R E N T B Y D E S I G N® Ownership of Instruments of Service (balanced approach)  The Client shall not reuse or make any modification to the construction documents without the prior written authorization of the Consultant.

Willis HRH D I F F E R E N T B Y D E S I G N® Ownership of Instruments of Service (balanced approach)  The Client agrees, to the fullest extent permitted by law, to defend, indemnify and hold harmless the Consultant, its officers, directors, employees and subconsultants (collectively, Consultant) against any damages, liabilities or costs, including reasonable attorneys' fees and defense costs, arising from or allegedly arising from or in any way connected with the unauthorized reuse or modification of the construction documents by the Client or any person or entity that acquires or obtains the construction documents from or through the Client without the written authorization of the Consultant.

Willis HRH D I F F E R E N T B Y D E S I G N® Ownership of Instruments of Service (balanced approach)  If Consultant is terminated for convenience, Owner is not entitled to reuse the documents  Does not permit the use of the documents on other projects  Protects Consultant from unauthorized reuse

Willis HRH D I F F E R E N T B Y D E S I G N® Construction Owners Association of America (unacceptable)  “The Construction Documents and any other documents or electronic media prepared by or on behalf of the Professional for the Project are the sole property of the Owner free of any retention rights of the Professional. The Professional hereby unconditionally transfers and assigns to the Owner all copyright claims, trade secrets or other proprietary rights with respect to such documents, and agrees, upon request of the Owner, to turn over to the Owner the originals and all copies of such documents and materials as of the date of such request.”

The Client Agreement Electronic Transfer of Instruments of Service

Willis HRH D I F F E R E N T B Y D E S I G N® DELIVERY OF ELECTRONIC FILES  In accepting and utilizing any drawings, reports and data on any form of electronic media generated and furnished by the Consultant, the Client agrees that all such electronic files are instruments of service of the Consultant, who shall be deemed the author, and shall retain all common law, statutory law and other rights, including copyrights.

Willis HRH D I F F E R E N T B Y D E S I G N® DELIVERY OF ELECTRONIC FILES  The Client agrees not to reuse these electronic files, in whole or in part, for any purpose other than for the Project. The Client agrees not to transfer these electronic files to others without the prior written consent of the Consultant. The Client further agrees to waive all claims against the Consultant resulting in any way from any unauthorized changes to or reuse of the electronic files for any other project by anyone other than the Consultant.

Willis HRH D I F F E R E N T B Y D E S I G N® DELIVERY OF ELECTRONIC FILES  The Client and the Consultant agree that any electronic files furnished by either party shall conform to the specifications listed in Exhibit ___. Any changes to the electronic specifications by either the Client or the Consultant are subject to review and acceptance by the other party. Additional services by the Consultant made necessary by changes to the electronic file specifications shall be compensated for as Additional Services.

Willis HRH D I F F E R E N T B Y D E S I G N® DELIVERY OF ELECTRONIC FILES  Electronic files furnished by either party shall be subject to an acceptance period of _____ (____) days during which the receiving party agrees to perform appropriate acceptance tests. The party furnishing the electronic file shall correct any discrepancies or errors detected and reported within the acceptance period. After the acceptance period, the electronic files shall be deemed to be accepted and neither party shall have any obligation to correct errors or maintain electronic files.

Willis HRH D I F F E R E N T B Y D E S I G N® DELIVERY OF ELECTRONIC FILES  The Client is aware that differences may exist between the electronic files delivered and the printed hard-copy construction documents. In the event of a conflict between the signed construction documents prepared by the Consultant and electronic files, the signed or sealed hard-copy construction documents shall govern.

Willis HRH D I F F E R E N T B Y D E S I G N® DELIVERY OF ELECTRONIC FILES  In addition, the Client agrees, to the fullest extent permitted by law, to indemnify and hold harmless the Consultant, its officers, directors, employees and subconsultants (collectively, Consultant) against all damages, liabilities or costs, including reasonable attorneys' fees and defense costs, arising from any changes made by anyone other than the Consultant or from any reuse of the electronic files without the prior written consent of the Consultant.

Willis HRH D I F F E R E N T B Y D E S I G N® DELIVERY OF ELECTRONIC FILES  Under no circumstances shall delivery of electronic files for use by the Client be deemed a sale by the Consultant, and the Consultant makes no warranties, either express or implied, of merchantability and fitness for any particular purpose. In no event shall the Consultant be liable for indirect or consequential damages as a result of the Client's use or reuse of the electronic files.

Willis HRH D I F F E R E N T B Y D E S I G N® INFORMATION PROVIDED BY OTHERS  The Client shall furnish, at the Client's expense, all information, requirements, reports, data, surveys and instructions required by this Agreement. The Consultant may use such information, requirements, reports, data, surveys and instructions in performing its services and is entitled to rely upon the accuracy and completeness thereof.

Transfer of Electronic Files to Contractors Terms of License

Willis HRH D I F F E R E N T B Y D E S I G N® Disclaimer for Transfer to Contractor (1) Dear (Contractor’s Name): At your request, we will provide copies of electronic files for your convenience and use in the preparation of shop drawings related to (name of project), subject to the following terms and conditions: Our electronic files are compatible with (software, hardware specification). We make no representation regarding the compatibility of these files with your software beyond the specified release of the referenced specifications.

Willis HRH D I F F E R E N T B Y D E S I G N® Disclaimer for Transfer to Contractor (2) Data contained on these electronic files are part of our instruments of service and shall not be used by you or anyone else receiving these data through or from you for any purpose other than as a convenience in the preparation of shop drawings for the referenced project. Any other use or reuse by you or by others will be at your sole risk and without liability or legal exposure to us.

Willis HRH D I F F E R E N T B Y D E S I G N® Disclaimer for Transfer to Contractor (3) You agree to make no claim and hereby waive, to the fullest extent permitted by law, any claim or cause of action of any nature against us, our officers, directors, employees, agents, or subcontractors that may arise out of or in conjunction with your use of the electronic files.

Willis HRH D I F F E R E N T B Y D E S I G N® Disclaimer for Transfer to Contractor (4) Furthermore, you shall, to the extent permitted by law, defend, indemnify, and hold us harmless against all damages, liabilities, or costs, including reasonable attorneys fees, and defense costs arising out of or resulting from your use of these electronic files.

Willis HRH D I F F E R E N T B Y D E S I G N® Disclaimer for Transfer to Contractor (5) These electronic files are not considered construction documents. Differences may exist between these electronic files and corresponding hard-copy construction documents. We make no representation regarding the accuracy or completeness of the electronic files you receive. In the event that a conflict arises between the signed or sealed hard-copy construction documents prepared by us and the electronic files, the signed or sealed hard-copy construction documents shall govern.

Willis HRH D I F F E R E N T B Y D E S I G N® Disclaimer for Transfer to Contractor (6) You are responsible for determining if any conflict exists. By your use of these electronic files, you are not relieved of your duty to fully comply with the contract documents, including, and without limitation, the need to check, confirm, and coordinate all dimensions and details, take field measurements, verify field conditions and coordinate your work with that of other contractors for the project.

Willis HRH D I F F E R E N T B Y D E S I G N® Disclaimer for Transfer to Contractor (7) Because information presented on the electronic files can be modified, unintentionally or otherwise, we reserve the right to remove all indicia of authorship and/or involvement from each electronic display. We will furnish you with electronic files of the following drawing sheets: ________________________

Willis HRH D I F F E R E N T B Y D E S I G N® Disclaimer for Transfer to Contractor (8) A service fee of $__(___hundred dollars) per sheet shall be remitted to us prior to delivery of the electronic files. Under no circumstances shall delivery of electronic files for use by you be deemed a sale by us, and we make no warranties, either express or implied, of merchantability and fitness for any particular purpose. In no event shall we be liable for any loss of profit or any consequential damages as a result of your use or reuse of these electronic files.

Willis HRH D I F F E R E N T B Y D E S I G N® Conclusion  Electronic file risks are best managed by: – careful negotiation of contract language – documentation of the content of file transfers – documentation of the rights associated with file transfers.

Willis HRH D I F F E R E N T B Y D E S I G N® Thank you!  To register for upcoming on-line seminars or for more information on our products and services visit our website at  Mark Blankenship, CPCU, AIC