Co-owners cannot separately license without consent
Under New Zealand law, subject to any agreement to the contrary,
each co-owner of a patent:
may make, use, exercise or vend the patented invention without
accounting to the other co-owner(s); and
may not assign or licence its rights without the consent of the
This has a number of practical implications for potential
licensees and licensors of co-owned patents.
Issues for licensees to consider during due diligence
Consent from co-owner
Firstly, it is important to ensure that you obtain a valid
licence by seeking confirmation that that co-owner has the consent
of the other co-owner(s). If necessary, ask to see the relevant
agreement or a separate document relating explicitly to the
What rights does the co-owner retain?
Secondly, to fully understand the degree of the exclusivity that
you are obtaining you will need to understand exactly what rights
the other co-owner retains. Unless there is an agreement to the
contrary, the other co-owner will be entitled to use the invention
in competition with you. Ask whether there is any agreement
limiting the other co-owner from using or commercialising the
invention. In some instances, there will be very good reasons for
allowing the other co-owner to continue using the invention; for
example if it is a research organisation conducting research in the
relevant field. In that case, it may be better to have an agreement
that allows continued use but which has appropriate constraints and
ensures that some benefits flow through to you. The precise terms
of this agreement will impact on the value of your licence.
Can other parties obtain licences without your knowledge or
What happens if the other co-owner wants consent from your
licensor to issue a licence to a third party in future? Will you,
as an existing licensee, have any control over whether your
licensor grants that consent? Again, ask whether there is any
agreement amongst the co-owners in this regard. If no such
agreement exists, make sure your licence agreement stipulates that
your licensor will not grant consent to the other co-owners except
with your consent.
Licensors of co-owned patents should take care with
If you are a co-owner, all of the issues above are equally
pertinent to you. Taking steps to address these issues before you
seek licensees will greatly increase your chances of finding a
suitable licensee and will avoid these issues arising unexpectedly
Licensors should also take special care before agreeing to
warranties about their ability to enter into the licence agreement,
unless consent from all co-owners has already been obtained in
And finally: The value of expert legal advice
It is always prudent to have your licence drafted or reviewed by
a lawyer who specialises in patent licensing in New Zealand.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
James and Wells is the 2009 New Zealand Law Awards winner of
the Intellectual Property Law Award for excellence in client
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