In an increasingly interconnected world where “collaboration” is a buzzword, jointly created intellectual property (IP) will become more
commonplace. It may sound like a good idea at the time to say everyone involved in the collaborative process gets a piece of the pie, that is, owns
the IP “jointly”. However this arrangement may cause headaches down the line if not thought through properly at the outset. Joint ownership of IP can
be more complicated than it sounds, resulting in a range of issues around commercialisation and enforcement.
How a co-owner “owns” the IP right, and how it can be used, will depend on the type of IP concerned and the statutory regulation that governs it. The starting point generally is that if each co-owner contributed to the IP, the IP would be jointly owned regardless of each co-owner’s contribution, whether small or significant.
Here, we discuss the 3 main statutory forms of IP protection:
Co-owners can agree to own the IP right in different shares and specify the percentage ownership of each co-owner depending on the contributions of
In the absence of consent from the other co-owners, a co-owner does not have the right to independently exploit the copyright, nor licence it to a third party.
Each co-owner has the right to use the IP rights granted in the patent themselves without the consent of the other co-owners but they cannot licence or transfer their interest. As commercialising a patent invariably involves granting a licence to a third party (e.g. to develop, manufacture or sell the technology), the rights of a co-owner to act independently are in practice quite limited.
Co-owners can agree to regulate their rights in a different way to what is set out above. For example, copyright owners may wish to have an agreement which restricts their ability to assign their interest in the copyright to ensure they don’t end up with a co-owner who is a competitor or whom they otherwise can’t deal with.
The issue obviously doesn’t arise in the context of a corporate owner, but what happens to jointly owned IP right when an owner who is a natural person dies? Generally the co-owner’s interest in the intellectual property passes to the beneficiaries of the deceased co-owner’s estate. This too can have unintended consequences if it is not thought through at the outset. The surviving owner may in those circumstances wish to have the right to buy out the deceased owner’s share. Again this requires advance planning, usually in the form of an option agreement, as well as consideration as to how such a purchase would be funded.
For collaboration to be effective and to facilitate a smooth path to commercialisation, IP owners should carefully consider how any co-owned IP will need to be used by each party and build in appropriate mechanisms to allow for that use.
When it comes to co-owned IP, it appears you can’t have your cake and eat it too.
For more information, please contact Peter Karcher.
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