Entangled IP

Learn about all-things joint ownership and why it's not as great as it seems
Marks & Clerk

To set the scene is to appreciate how vital collaboration is in any industry for its further advancement whilst carefully considering, what can be, the minefield that is ownership of jointly generated intellectual property (“IP”).

Collaboration between parties is crucial in quantum technology considering that there are only a handful of global players who actually possess and provide access to quantum computing capabilities. Specifically in the UK, we have only recently seen the building of a UK government backed quantum capability, which reiterates how small the active pool currently is. Active collaboration is key in advancing the adoption of quantum computing technology, as has been demonstrated by Canadian enterprises in the space.

Fundamental to collaboration is having an exploitation plan which relates to any results of the collaboration and the IP present within them (“Foreground IP”); this will depend largely on the types of parties involved and what is actually generated (for example, is the Foreground IP registrable (i.e. inventions/patents and design rights) or is of a commercially sensitive nature but not registrable as an IP right (for example, know-how, trade-secrets, copyright, design rights and software).

The exploitation plan, and by extension the rights of ownership of any Foreground IP, will depend largely on the parties involved as there are no set rules as to who should own the rights in the results of collaborative research.

While universities may not have the financial standing to obtain and defend patent rights, companies may lose interest in the invention and leave it unexploited. In reality, as between collaborators, ownership of rights may not in fact be the crucial issue provided each party obtains, under licence, the necessary access to the rights it needs.

Varying options for ownership generally fall under one of the following:

  • One party owns results/ Foreground IP
  • Each party owns results/ Foreground IP it generates
  • Jointly owned results/ Foreground IP
  • Each party owns the results/ Foreground IP in its field or an agreed defined field

For the purposes of this article, we will focus on option iii, as joint ownership of results/ Foreground IP has become increasingly common since as 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 IP 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. The parties will need to consider whether a licensing structure is sufficient for the commercial interests of parties involved, for example would the lead party be content with a licence or would they require ownership via assignment.

Where the ownership structure is either jointly owned or owned by the party generating it, cross-licensing will inevitably come into play.

For example, where technology is jointly developed and owned by the collaboration (“Foreground Product”), the parties will need to determine whether royalties are payable by the other party when exploiting as both parties own different Foreground IP needed to produce the Foreground Product.

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. It is therefore usually preferable 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.

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