Jointly-owned IP, is it possible? Are there any pitfalls? How does it work in practice, and how can it be managed?
Drawbacks of Joint ownership
Some of the issues with having joint ownership of intellectual property, are as follows:
- For jointly-owned Patents, Trade Marks, and Copyright, a joint owner cannot licence or assign their interest without the consent of the other co-owners – which, aside from causing administrative difficulties, can also be overly burdensome and time-consuming for one co-owner to have to seek all others’ formal consent before granting a simple licence that is clearly in line with all owners’ interests and expectations.
- Following from the above, the patent application process (with its critical deadlines etc.) can be challenging if a co-owner is uncooperative or simply not interested, or that there are simply too many co-owners (i.e. too many cooks in the kitchen) – considering the process involves providing clear instructions regarding your patent, overseeing day-to-day management of the patent application and registration process, covering costs, and consultation and consent requirements in respect of key decisions.
- A joint owner of an Australian Patent can exercise rights in the patent for their own benefit, without accounting to the other joint owners (s 16 Patents Act), and without needing to pay anything to another joint owner.
- In a lot of cases, regardless of the relative ownership interests (i.e. whether a 1% or 99% owner), the rights of joint owners are seen as being the same as each other.
- Enforcement of jointly-owned IP can present issues, as when enforcement proceedings are commenced by one co-owner, all other co-owners usually need to agree to be joined as a plaintiff, failing which they must be joined as a defendant. While there is no need for co-owners to actively participate in proceedings commenced by another, their names are on the public record as being involved in the litigation.
- Often, the best outcome can be achieved by allocating IP ownership to just one party (e.g. a company/IP holding company), who then grants the other parties appropriate rights.
- The other parties may not need ownership if they are satisfied with the rights granted to them, which might include licences to use the IP and contractual rights to share in commercialisation revenue.
IP Management or Co-Ownership Agreement
Whilst not impossible, jointly owning/managing IP can be difficult, and would at the very least involve carefully considered contractual arrangements between all co-owners, setting out among other things, the respective owners’ rights, indemnities, insurance obligations, commercialisation proceeds, exploitation rights, accountability provisions, and licensing and assignment rights.
- Many drawbacks to jointly-held IP
- Having one IP owner is preferable
- If critical that IP is jointly-owned – consider an IP Management/Co-Ownership Agreement
To discuss IP Management or Co-Ownership arrangements, please do not hesitate to contact Jacob Bartels at Active Law.
Disclaimer – Reliance on Content
The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.