UK: Successful Joint Ventures and Collaborations

It is those companies which own or obtain access rights to such intellectual property that will be able to exploit the rewards.

Marie McMorrow sets out the following basic guidelines.

How do you generate intellectual property? Usually, the owner of IP produced by an employee is the employer, provided creative activity is undertaken during the normal course of employment. Ensure employment contracts adequately explain and clarify the scope of ‘normal course of employment ’to avoid future disputes on the issue -which typically arise once an employee has moved to a new and competing employer.

Are the activities of third party contractors, typically software engineers and project consultants governed by an appropriate contract? Avoid simply signing or agreeing to contract on their standard terms. Either amend such standard terms or negotiate a contract to include specific provisions concerning ownership of intellectual property, which stipulate that all IP generated is the property of the commissioning party. The commissioning party does not, in all circumstances, acquire the rights to the IP simply by virtue of paying the consultant ’s or engineer ’s fees. Further provisions concerning confidentiality (during and post the agreement)and warranties confirming the originality of the engineer ’s or consultant ’s work are also standard requisite terms.

Consider what processes are in place for ensuring that agreements with third parties, such as confidentiality, consultancy and R&D agreements, are negotiated and signed off promptly to avoid the situation arising whereby development projects come to an end before the contract terms are agreed. In turn, allocate responsibility for maintaining a database and copies of all such agreements.

Consider developing such processes and procedures into a corporate IP policy that, by virtue of their contracts of employment, senior employees and those at all levels in R&D and engineering departments are required to adhere to. Such procedures should include the use of standard form confidentiality agreements, and guidelines as to the timing of issue of such agreements. There should be a clear dictat that information, especially about core elements of a system, cannot be released without sign off of a confidentiality agreement and approval of a senior employee, such as Technical Director or Senior Manager.

Consider also whether elements of your technology should be ‘ring-fenced ’and not available for dissemination regardless as to whether confidentiality undertakings have been given without the approval of corporate legal or board members. The reason for this is whilst confidentiality agreements provide an element of protection, the damage arising from breach of such undertakings for highly sensitive information is difficult to quantify and often cannot be adequately compensated for. Once disclosure has arisen an organisation can lose the potential commercial advantage derived from years of research and investment -how do you put a price on that?

Prior to embarking upon a joint development or other collaboration, it is vital to undertake due diligence. This is to confirm the extent of the technology and rights in that technology which your potential partner claims to own -and which in turn you will be incorporating or marrying with your technology and know-how. Get your solicitor or patent agent to check existence of any patents or applications. Request a design history from your potential partner which in particular, should enable you to identify any third party input or platform technology. This could well prevent your collaboration partner from granting the access and licence rights required to enable you to exploit the technology once the joint project is complete. This could have a disastrous commercial impact of diminished or significantly limited returns on the financial investment into the project. If your prospective partner does not own the requisite technology but claims to have access rights, you need sight of the licence documentation. Also ensure that where third party contractors have provided input into the generation of the technology, appropriate assignments are in place.

Bear in mind that your potential partners ’IP procedures may not be as rigorous as they should be!

Ensure that all development and joint venture arrangements adequately protect each party ’s IPR, often referred to as ‘background IPR ’. At the same time, it must strike the balance of allowing each party adequate usage rights during the project as well as afterwards, to facilitate maximum exploitation of the ‘foreground IPR ’or that which has been generated during the life of collaboration.

Consider carefully what it is you want to do with any ‘foreground IPR ’generated during the life of a development project or joint collaboration. Make sure that by clear drafting you reserve for yourself sufficient usage rights to fully exploit the technology. If you envisage a further revenue stream from granting third party licences or if you anticipate that exploitation will inevitably require further collaborations with third parties -ensure that you also have the right to grant sub- licences for the purpose of third party usage of the technology.

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.