Where new technology is developed by a number of firms in collaboration, it is important to consider in advance how the ownership of any resulting intellectual property (IP) will be handled. If the parties don’t agree this up front, it can lead to expensive disputes and any new technology could be legally unusable even to one of the joint collaborators.

In the absence of agreement, there are a number of possibilities as to how the resulting IP would be owned. It all depends very much on the nature of the IP developed (for example, patents, copyright, know-how etc) and the surrounding facts and circumstances.

It could be, for example, that where the newly developed technology comprises separate elements, each element of IP is owned separately by the party who developed it. This then means that none of the other parties could use the new technology without a licence from the other parties.

Or it could be that the IP is held by one party and not by another, even though the other may have contributed to the joint development. In a case concerning the ownership of the patents to a pharmaceutical capsule, the court decided that the patent would be owned by the party that devised the core inventive concept. The other party that had developed the means actually to put that concept into practice was not entitled to be a joint owner of the patent.

Or it could be that the IP is jointly held by the parties. In relation to joint software development, copyright laws provide for joint ownership where software is developed by the collaboration of two or more developers in which the contribution of each developer is not distinct from the others. In a case concerning development of software known as Keyport for use in radios, the court decided that a party which had made a valuable contribution in defining the specification for the software and bug fixing nevertheless did not acquire any rights to the IP. The court decided that the contribution, albeit significant in terms of time input and value, did not amount to a significant part of the skill and labour which is protected by copyright, namely the authoring of the code. Moreover, in the absence of any agreement with the author, that party was not entitled to a licence to use the software.

If the parties consider up front how any resulting IP should be owned then, commercially, they may be inclined to agree that jointly developed IP should be jointly owned. This sounds fair. However, from a legal viewpoint, joint ownership of IP is less than ideal and can be problematic.  This is because none of the joint owners has the freedom to use, license or assign the IP without the consent of the others. This can lead to deadlock.

The courts have been kept very busy with disputes over IP ownership resulting from some form of collaboration. The parties would be well advised to consider the issues at the outset of their relationship and to enter into a clear agreement so as to avoid costly a dispute and possibly being denied access to the fruits of the collaboration.

Related reading: Protecting your Business Model and IP, Terms of Business and Contracts

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