Using IP in requests for proposals and tenders to reduce commercial risk

For most startups and technology companies, winning a tender or request for proposal (RFP) can be a major breakthrough.

Government contracts, corporate procurement opportunities, and large-scale supply agreements can create enormous growth opportunities. However, they can also create significant intellectual property risks if your ideas, designs, systems, or product innovations are disclosed without proper protection.

Many businesses spend years developing innovative products or systems, only to unintentionally expose valuable intellectual property during procurement discussions.

Sometimes the risk does not come from malicious behaviour. Often, it comes from misunderstanding who owns the IP, what can be disclosed safely, and how procurement teams may use the information contained in a proposal.

This article provides some insight into how intellectual property affects tenders and procurement processes, and how startups and innovators can better protect their ideas during requests for proposals.

Why intellectual property matters in tenders and procurement

Government tenders and procurement processes often require businesses to submit detailed information about:

For innovative businesses, these submissions may contain some of the company’s most valuable intellectual property assets.

Procurement processes are designed to compare suppliers. In wanting to be competitive, businesses sometimes reveal far more information when competing during the procurement process than they should..

How startups accidentally expose IP during tender submissions

Many founders assume their intellectual property is automatically protected during a tender process. Unfortunately, this is not always the case.

A proposal may include:

• product renderings
• engineering drawings
• technical specifications
• workflow diagrams
• software architecture
• confidential pricing methods
• unique manufacturing techniques

If these are disclosed too broadly, competitors may gain insight into how your innovation works or how your business operates.

One of the most common mistakes is disclosing a new invention publicly before filing a patent application.

While Australia has some limited grace period protections, many overseas jurisdictions do not. Public disclosure before filing can potentially destroy international patent rights.

This is particularly important for startups planning future international expansion or investment. The same risks can also arise during prototype demonstrations and early product testing. Many startups use working prototypes during procurement discussions to help potential customers visualise their technology or product, but in doing so, may unintentionally disclose valuable technical innovations or product designs before appropriate intellectual property protections are in place. This is one reason why prototype development and IP strategy should work together from the earliest stages of commercialisation

Using patents and design rights in procurement processes

Different forms of intellectual property can protect different aspects of a tender submission.

Successful businesses typically take a layered approach with various forms of intellectual property rather than relying on only one form of protection.

How intellectual property can influence tender outcomes

Intellectual property rights can be a deciding factor when pursuing contracts with government, municipal, or commercial entities.

For example, a company may develop safety equipment for use on mining and industrial sites that is very popular with users and prevents potentially dangerous incidents.

Due to such popularity and effectiveness in increasing safety procedures, the industry at large may regulate the use of the safety equipment so that any personnel or contractors must use it when performing certain tasks on site.

As the developer of the safety equipment secured it by means of suitable patent, design and trade mark registrations, they control the use of the technology and who are allowed to manufacture and use it.

This is a good example of how intellectual property can provide significant commercial leverage, particularly where functionality and use of a technology forms a significant part of the value proposition for a government, municipal, or commercial entity.

Who owns intellectual property created during a tender process?

One area that businesses frequently overlook is ownership of intellectual property created during the procurement engagement itself.

Some tender contracts contain clauses dealing with:

• background IP
• newly created IP
• licensing rights
• assignment of ownership
• future usage rights

In simple terms:

• Background IP usually refers to intellectual property you already owned before the project began.
• Project IP may refer to new material created during the engagement.

⚠️ Problems arise when procurement contracts contain broad assignment clauses that unintentionally transfer ownership of valuable innovations to the customer.

This is especially important for technology startups building scalable systems or software platforms.

A company may believe it is merely delivering a project, while unintentionally assigning ownership of core technology that forms part of its broader business model.

Carefully reviewing procurement agreements before signing is often just as important as protecting the technology itself.

Practical ways to protect IP during requests for proposals

➡️ File protection before public disclosure

Timing can be critical: where possible, consider filing patent or design applications before submitting tender proposals or publicly disclosing new innovations, prototypes, or product designs.

➡️ Use confidentiality notices and NDAs

Clearly marking confidential information and using non-disclosure agreements can help demonstrate that sensitive information was disclosed in confidence.

This is particularly important where trade secrets or proprietary systems are involved.

➡️ Limit unnecessary technical disclosure

Not every procurement proposal requires full disclosure of how a system works internally. If the result or benefit of a technology can be disclosed without disclosing specifics of how this is achieved, then often this is a better option (unless, of course, suitable intellectual property registrations are in place).

Many businesses inadvertently reveal far more information than may be necessary during procurement submissions.

➡️ Identify background intellectual property clearly

Where contracts refer to ownership of IP, ensure that pre-existing technology, systems, software, or know-how are clearly identified as retained background IP.

This can help prevent disputes later.

Why intellectual property strategy should form part of procurement planning

The most successful innovative businesses do not treat intellectual property as an afterthought.

They build Intellectual Property Strategy into:

• product development
• procurement planning
• supplier relationships
• partnerships
• investment preparation
• commercial negotiations

Tenders are not simply sales opportunities. They are also moments where valuable innovation may be exposed, evaluated, copied, or negotiated.

Strong intellectual property governance helps businesses approach these opportunities more strategically and with significantly lower risk.

FAQ: Intellectual property in tenders and procurement

Useful resources for intellectual property and procurement

Case studies | IP Australia

Australian Government intellectual property manual  

Australian Government’s procurement information system

Commonwealth Procurement Rules | Department of Finance

Reducing intellectual property risks during procurement

Many intellectual property problems occur long before a dispute arises. They often begin during early conversations, procurement discussions, or proposal submissions, where valuable ideas are disclosed without a clear protection strategy.

If you are preparing a tender, submitting a proposal, or discussing innovative products or systems with potential customers, suppliers, or government bodies, it is worth considering how your intellectual property is being protected before disclosure occurs.