Business and artistic alliances come in many forms. Whether you are developing technology, music, media or art installations, if you are working with others on a creation or sale there is always a risk of falling out. The perils of ambiguous and incomplete agreements can wreak havoc on even the most solidly-founded collaborations.
Being clear on your rights and your ownership is vital for protecting your share of the profits. Collaboration agreements aim to do just that.
We advise on all types of collaborations and commercial joint ventures. These range from artist alliances, to simple business partnerings to the development of new business concepts requiring heavy investment.
Essentials for a collaboration contract
Every collaboration or joint venture is unique so the agreement that supports them needs to be too. However, there are some terms that need to be considered, whatever the collaboration:
- Carve out – who is bringing what to the table? Is the intention that the ownership of existing background intellectual property rights be retained by the respective collaborator bringing it to the joint venture?
- Responsibilities – which parts of the project are separate and which are joint? Who will be responsible for various administrative tasks such as filings?
- Share of ownership in developments and end products – you should decide at the outset how the artworks, technology or media (and importantly the intellectual property rights in them) will be owned. Will all the collaborators have an equal share, or will it be divided to reflect the level of work put in to development?
- Change of ownership – what will happen if one collaborator decides that they want to sell their share of the works? Must their share be offered to the other collaborators? Or will they be able to sell to third parties? Will co-owners have the final say as to whom works can be sold?
- Exploitation – what influence will collaborators have on how the product is taken to market? Will collaborators be able to exploit the rights themselves, grant licences to others and/or assign their rights? Thought needs to be given to the end stages at the start.
- Confidentiality – it is important to have a confidentiality clause within the agreement. Disclosure of confidential information can jeopardise projects early on and cause problems for proving ownership of intellectual property rights. For future sales, a breach of confidentiality early on could be fatal to the purchase price.
Do you need to create a new joint venture company?
We often set up a collaboration company or joint venture vehicle for carrying out the specific purposes and trading activities of the collaboration.
If the intention is to sell the intellectual property or any specific assets created by the collaboration a separate company will often make this sale easier. Also, liabilities created within the collaboration company can be ring-fenced and protected from the creditors of a particular contributor.
How the shares within the company will be managed and dealt with is often set out in a shareholders’ agreement. This sits alongside the provisions of the collaboration agreement. The shareholders’ agreement governs the relationship between the collaborators, whereas the collaboration agreement governs their relationship with the works.
The risk of no collaboration agreement
The default position is that each co-owner is entitled to an equal share in the works created through the project and the intellectual property rights subsisting in them. This means that each co-owner may use them without the consent of, and without accounting to, the other co-owners. Not only is this often unfair, but it also harms your business.
For example, if two or more people are registered owners of a trade mark, each owner can individually use the trade mark for their own purposes. One might choose to use it on merchandising, another might decide to use it on a mobile app, whilst another might decide to use it on a store front. Not only is this confusing to the public, but multiple varied uses may mean the trade mark becomes vulnerable to cancellation for ‘genericide’ or improper use.
Infringement, enforcement and disputes
Collaboration agreements are best thought of as commercial ‘pre-nuptial’ agreements – you hope you never have to take it out of the drawer, but just in case you do, it helps to minimise disputes and the fallout from them.
Where a dispute does arise, it is treated as a breach of contract. We aim to assess and resolve issues quickly and minimise commercial damage.
Our approach is practical, experienced and cost-effective.