Denne ukes artikkel «Hvorfor bør du ikke eie IP sammen med andre» er skrevet av Simon Portman (BA, Dip Law), Managing Associate & Solicitor hos UT Partner Marks & Clerk. Artikkelen publiseres som den ble skrevet, på engelsk.
Simon specialises as a commercial contract lawyer for technology companies. He works for clients in the electronics, bioscience, defence, software and nanotech industries, advising companies ranging from small start-ups to big multinationals as well as individuals, public bodies and charities.
He advises on a wide range of contracts, including licenses, R&D collaborations, manufacturing agreements and procurement documentation. On the regulatory front he has advised on compliance with clinical trials legislation and novel food applications, as well as freedom of information and data protection issues.
Simon has co-written two business textbooks, Commercial Issues for Life Science Companiesand Intellectual Property: the Lifeblood of your Company and has contributed articles to numerous publications, including the Financial Times, Patent World and Managing Intellectual Property. He regularly gives seminars and workshops at pharmaceutical conferences in the UK and internationally. He was also part of a UK IPO steering group putting together policies and contracts suitable for R&D collaborations in China.
Prior to joining Marks & Clerk Solicitors in March 2009 Simon trained at a London law firm (where his training included secondment to the petrochemical industry) and subsequently worked at one of Cambridge’s leading commercial practices. Simon spearheads the Cambridge branch of Marks & Clerk Solicitors. He is a member of the industry groups One Nucleus and Cambridge Network.
A Change in Direction
Major advances in technology and society in recent years have caused many companies to reassess the emphasis they previously laid on internal innovation. They have come to realise that the traditional view that their own employees are the best in their field is outdated, which has paved the way for more widespread collaborative innovation.Collaborative Innovation
The term collaborative innovation is very broad, and may take many different forms under a variety of conditions. It can, for example, include anything from collaborating with a university, or other innovating companies, to simply improving relations with key suppliers. The purpose of the collaboration, the number of parties involved, and the funding applied can vary significantly. However, whatever the purpose, one would expect a successful collaboration to yield results and, preferably, identifiable intellectual property (IP). This then gives rise to the question, who owns it and who should own it?In most jurisdictions the rule of thumb, in the absence of any contractual arrangement to the contrary, is:
- If you generate or invent IP you own it (or your employer does if it was generated in the course of your employment).
- If more than one party is involved in generating the IP they will own it jointly.
Joint ownership could arise by accident – for example, two experts in the same field may start talking at a conference and suddenly come up with something innovative. It is very likely to happen by design in a collaborative R&D venture and co-ownership may seem the logical way to go in any case. This is because, when one is collaborating with an external innovator, it is often assumed that the partnership will be equal, with mutually beneficial research or development. However, the parties involved in a collaboration project can be from various disciplines with varying stature and funding. For example, it may be that one contributor is able to provide the specialist knowledge or expertise to lead the project with minimal input from the other collaborators, or likewise for more complex projects, contributions from a number of different disciplines may be required. Identifying, and assigning the ownership of the resulting intellectual property can therefore become complicated as the monetary and intellectual contributions need to be recognised. Consequently, joint ownership may not be the fairest solution. Moreover, it is rarely the neatest.
Owning the Intellectual Property
The ownership of any IP that may arise through collaborative innovation is a crucial issue to resolve. Wherever possible it should be agreed in a cooperation agreement before any work takes place. When a company finances external innovation, it would generally expect to own any resulting IP, and will anticipate that they will be responsible for financing the filing of any patent applications, and any additional costs incurred for maintaining the granted patents. If a company is unable to own all of the IP related to its business, for example when it is owned by a university, the company will usually attempt to secure exclusive rights to the use of that patent for a specified period.
Jointly Owned Intellectual Property
As this type of collaborative innovation has become more prevalent, joint ownership of IP has become increasingly common since, as was said above, it is perceived to be the ‘easiest’ solution in projects involving multiple parties. However, this also presents many dangers. When jointly developed IP rights arise, the cost and risk of the research and development work involved are shared by both parties. This means that joint decisions are required from all co-owning parties for practically any or all disposal of the intellectual property rights. What happens if one party won’t cooperate in this, play its role or pay its share of the costs, whether it be in connection with patent costs or countering infringement? This could mean that a contract between the parties is required for each party to be able to enforce its rights and to impose rules regarding licensing, exploitation and revenue share.
Throughout the patenting process, jointly owned IP rights will repeatedly face challenges, as differing business have different patent coverage requirements. This can mean that the drafting, filing and prosecution of a patent therefore becomes complex and more costly, despite the end result not necessarily being equally beneficial to all parties involved. Common areas where joint owners may incur further problems include licensing, divestment, warranties and patent litigation. The same issues arise in connection with trademarks and other registered IP rights.
As the licence will be available from more than one owner, the owner may find that the value of the licence can be diluted. If one of the owners decides that it would like to divest its share of the IP, it may find that the value is reduced, as it will only be able to sell its share, rather than the entire rights. Without being the single owner, it may also be unable to become involved in patent litigation without the agreement of the other joint owners.
Territorial Nature of Intellectual Property
It is important to remember that the laws governing IP and the interpretation of them will vary in different jurisdictions. IP is territorial by nature due to the fact that each country enacts its own IP legislation. When entering into a collaborative partnership it is therefore important for the parties to consider that, if they are working in different countries, they may have different expectations of their rights based on the laws from their own jurisdictions. Moreover, if the same IP becomes the subject of patent or trade mark protection in different countries, different rules may apply in each. It is strongly advisable that this issue is addressed in the formal agreement before the collaboration takes place.
In the UK, Section 3b of the UK Patents Act 1997 states that unless otherwise agreed by the joint owners, each owner has the right to use the patent itself. However, if any of the joint owners seek to amend or revoke the patent; grant a license; or, assign or mortgage their share of the IP, they must obtain the consent of the other owners.
Under US patent law, the default rule is that none of the joint owners are required to seek permission from any of the other owners to use, or exploit the patent. Nor are they obliged to share any of the royalty revenues with any of the other owners. However, in the event that one of the owners wishes to sue rather than license the patent to a third party, it must seek the agreement of the other owners. If one of the owners does not agree, it may terminate the lawsuit by either refusing to join or by granting its own license without consulting the other owners.
It is also important to consider that there are different types of IP and IP protection and if multiple forms of IP apply to the same project results, joint ownership may become even more complex. For example, contrary to the US patent law, under the US Copyright laws, joint owners are required to share the royalties. Many products or processes are protected by multiple forms of IP so it can be very complicated to calculate the royalties owed to the other owners if the product that is covered by both the patent and copyright laws is licensed by a joint owner. The owners would need to determine which percentage of the revenue is subject to royalty sharing under the US copyright law and how much is exempt under the US patent law.
In China, one of the most important issues addressed by the Third Amendment to the Chinese Patent Law in 2008, was the rights of joint owners of patents. The new provision specified that unless otherwise agreed, a joint owner is entitled to utilise the patent, or grant a non-exclusive licence to the patented product without reference to the other owners, provided any income generated from such licence is shared between the owners. Any other use of the jointly owned patent e.g. granting an exclusive license must be agreed upon by all of the joint owners.
Before proceeding with jointly owned innovation, it is advisable to remember that alternative approaches are available and could be imposed contractually to override the default position and eliminate the confusion in brings. For instance, one party could take on the ownership of all of the IP and license it to the other parties involved in the collaborative innovation. Alternatively, it could be divided among the collaborating parties based on the vested interests of each party, to share the cost and provide coverage with cross licenses for each party, or each party could own the IP in a different technical field.
To conclude, although joint ownership is often thought of as the ‘fair’ or ‘easy’ option, in reality, this is usually not the case, as it can be over complicated and sometimes even unworkable. Our recommendation would be to avoid jointly owned IP wherever possible, but where it is unavoidable, ensure that an agreement between the collaborating parties setting out the obligations of all involved, and detailing the worldwide rights, is reached in advance. In short, co-owning IP can be like sharing a car with someone who lives at the other end of the country or being married to someone you can never leave, however badly they treat you. Neither is a particularly desirable option.