If you are working with others on the creation and or sale of intellectual property or technology there is risk. The risk is that you may face an unintended split of the revenues or take on unexpected liabilities. We solve the risk areas which in turn can help to promote a successful collaboration.
Typical problems solved for collaborators
Risks with no collaboration agreement in place
If a written agreement is not in place, then owners will have to rely on statutory provisions, which might not necessarily reflect the true interests of the parties. In the UK the following statutory provisions will apply:
Each co-owner is entitled to an equal and undivided share in the intellectual property right.
Each co-owner may use the intellectual property right without consent of, and without accounting to, the other co-owners.
For example if two or more people are registered owners of a trade mark, each owner can individually use the trademark for their own purpose. 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. The problem with this is that the mark may become vulnerable to cancellation for improper use.
Licensing and assignment
One co-owner shall not without the consent of all the co-owners:
- Grant a licence;
- Assign his share in the intellectual property or
- Mortgage their share of the rights.
Without a written agreement, joint owners could face problems in deciding:
- Who pays for any IP filings?
- Who directs prosecutions of any IP filings?
- Who decided in which jurisdiction such IP filings are made?
- Who can enforce the IP?
- Who gets royalties earned as a result of licensing the IP and in what proportion?
Failing to clarify and record these issues prior to creating any intellectual property can lead to:
- Costly disputes
- Breakdown in business relationship
- Reliance on statutory provision
- Intellectual property slipping in value
Do you need to create a new company
We often set up a collaboration company or joint venture vehicle to carry out the work. If the intention is to sell the created work and the business a separate company will make the sale easier. Also, liabilities created within the collaboration company can be ring fenced and protected from creditors of a contributor.
How the shares within the collaboration company will be managed and dealt with is often set out in a shareholders’ agreement which runs in conjunction with a collaboration agreement.
Essentials for a collaboration agreement
Long documents with unnecessary clauses do not help anyone. A collaboration agreement typically should consider:
Carving out IP or technology from the collaboration
If the intention is some existing IP or technology should be retained the collaboration agreement should say so.
- Identify the background IP that a party intends to use or share in connection with the collaboration or service.
- Include an acknowledgement that the ownership of the background IP remains with the current owner.
- Expressly carve out background IP from any assignment of IP rights.
Allocation of shares between joint owners
For IP or technology that is developed under the agreement, parties will have to decide how the IP will be owned. It will deal with the amount of shares each collaborative partner will own in the intellectual property. For example will the collaborators all have an equal share in the intellectual property, or will the shares be divided to reflect the level of work that each partner puts into development?
Change of ownership within the collaboration
What will happen if one co-owner decides that they want to sell their share of the collaboration? Will their share of the IP or technology be sold to the other co-owners? Or will the other co-owners have the final say as to who the shares can be sold to.
In addition the collaboration should deal with what will happen if one of the co-owner dies. The default provision is that on death the assets owned by the collaborator will pass to the estate. If the collaborative partners are not happy with this, they will need to have an express provision in place that states otherwise.
Right of exploitation of collaboration created
To be able to influence how the product is taken to market control should be reserved within the collaboration agreement. Thought should be given to whether it will be appropriate for each collaborator, with or without the consent of the other collaborators to:
- Exploit the intellectual property rights themselves;
- Grant licences of the intellectual property rights to others (on an exclusive or non-exclusive basis); and
- Assign the intellectual property rights.
Infringement and enforcement issues
Who will be responsible for monitoring and policing the collaboration work and pay the expenses for any infringement in connection with it. This is important because for many intellectual property and technology rights swift action is needed to stop infringement. For example if a trade mark has been infringed and no action has been taken, the trade mark can be revoked for becoming generalised.
It is important to have a confidentiality clause within the agreement. Disclosures of confidential information can be an obstruction to future IP rights registration especially patent, and design.