# Derived > Derived means achieved through creation, development, design or generation, directly, indirectly, fully or partially. **Term:** Derived **Last updated:** 2026-07-29 ## Definition ## What Derived Means in a Contract Derived is a linking word that describes the relationship between an original input and a resulting output. When a contract says something is derived from another item, it means that item was achieved through creation, development, design, or generation, whether that process was direct or indirect, and whether the connection to the original is complete or only partial. The term rarely stands alone as a defined item; instead, it modifies other concepts such as data, works, materials, or intellectual property. Because the word is deliberately broad, it captures outcomes that might otherwise slip through narrower definitions. A report generated from raw data, a modified version of software code, or a design that incorporates elements of an earlier prototype could all be described as derived from the original source, even if the final output looks quite different. This flexibility is useful precisely because creative and technical processes rarely produce a clean, single-step transformation. Contracts use derived to make sure that outputs several steps removed from the original input are still covered by the relevant obligations or rights. ## How Derived Is Defined or Measured Most contracts do not attempt to measure derivation with precision; instead, they rely on functional language describing the type of connection required. The phrase directly or indirectly signals that even a distant or multi-step relationship between the original material and the output can qualify. The phrase fully or partially signals that only part of the output needs to trace back to the original for the term to apply. In practice, parties assess whether something is derived by asking whether the output would exist, or would exist in its current form, without reference to the original material. If the answer is no, a derivation argument is usually available. - Direct derivation: the output is a modified or adapted version of the original. - Indirect derivation: the output relies on insights, structure, or data drawn from the original, even without directly copying it. - Partial derivation: only some components or sections of the output trace back to the original source. ## Where Derived Appears in Agreements The concept shows up most often in intellectual property clauses, particularly definitions of derivative works, background IP, and foreground IP. It is common in technology and creative contracts where one party builds on materials supplied or owned by the other. It also appears in data protection and licensing clauses, where a dataset or report derived from personal or proprietary information may carry ongoing restrictions. Agreements such as a