In many cases, IP collaborations take place out of necessity. Oftentimes, various firms work together to overcome hurdles of building prototypes and getting a project into production. However, the law surrounding IP collaborations can be a bit sticky.
When you have multiple inventors, regardless of which company they’re from, and how much or little each contributed, each has an undivided and equal right in the patent. This means that any of those inventors can give a license for the product to another party without asking the other inventors to sign off on that activity or provide them any of the license proceeds. Two inventors can even independently license the same patent to two competing companies. Conversely, you can’t bring a lawsuit into the picture to enforce the patent unless you have all of the inventors on board.
As you can guess, this can lead to some very tricky business situations. Here are things to keep in mind when you collaborate on IP ventures.
The Ideal Collaborative IP Scenario
Anyone who leaves patents in the hands of inventors is making a really big mistake from the get-go. Companies should, as soon as possible, ensure that patents are assigned to the company itself. Not multiple companies, just one. You want to avoid a co-ownership situation.
Related: Protecting Your Intellectual Property: Operating, Employment, and Founders’ Agreements
Even the most amiable partners can disagree, and this is especially tricky when co-ownership of patents is involved. Enabling one partner to control the IP is the simplest way to avoid enforcement and licensing issues.
Assigning the patent to one company will take a lot of negotiation up front. But, it’s much better to deal with ownership up front than in the heat of a partnership conflict, when no one will be able to agree as to who contributed what and how much those contributions were worth.
Avoiding the Pitfalls of an IP Collaboration
Collaborations for the sake of R&D aren’t inherently problematic. Co-ownership is, though. Here are a few ways to approach your collaboration to avoid co-ownership headaches.
Related: Selling Your Company? The Exit Strategy That Doesn’t Involve Giving Up Your IP Rights
Get it in writing
Before any meetings or collaborative efforts, agree in writing which company will end up with the IP that results from the collaboration.
Record your communication
Whether you can agree in writing or not, make sure you record all your communication. This includes emails and verbal exchanges in meetings. Get any documents or drawings signed, dated, and notarized. This will make it much easier to go back to those records later to have evidence of everything that was said. Think of all these records as evidence that may have to be presented in a court of law — they may very well end up in that role.
File your IP ahead of discussions
In some cases, two parties may come to the table with the same invention or idea in mind. However, the first person who vocalizes that idea in a meeting may thereafter claim that they were the first to conceive of the invention, since the other party won’t have any evidence to the contrary.
You can protect yourself from these types of situations by filing a provisional patent covering every possible invention that you might bring to a meeting. Any IP that you plan on discussing with your collaborator, file for it, even if it’s as late as the day before the meeting is scheduled. Provisionals are quick and dirty, and can be filed last minute and at low cost if need be. You don’t want the other party to be able to lay claim to your invention.
This applies to trade secrets as well. If the other party discloses an idea similar to one of your trade secrets, there is nothing preventing them from filing for a patent on it the next day. To fend off this risk, file a provisional on any trade secrets that may arise during the meeting, and then abandon the provisional if the other party doesn’t mention a similar concept. Recall, provisionals never publish unless you convert them. If the other side does disclose a similar idea, then at least you can convert the provisional and preclude the other side from patenting what is effectively your trade secret (and obtain valuable IP at the same time).
Engage Your Attorney
Engage your corporate or IP attorney as early in a corporate collaboration as possible. If you haven’t already, do it now. The sooner you get them involved, the lower the chances that you’ll find yourself in court with your own R&D partner burning resources litigating over IP ownership.