Key Takeaways:

  • Joint IP ownership involves sharing IP rights between two or more parties, often arising from collaborative inventions or projects.
  • Establishing a joint IP ownership agreement is crucial to define each party's contributions, usage rights, and IP management to prevent disputes.
  • Joint IP ownership may complicate licensing and commercialization efforts due to shared control, and differing regulations can impact IP rights by jurisdiction.
  • Effective management of joint IP includes a clear allocation of responsibilities, including terms for potential IP exploitation and dispute resolution.
  • Consulting a legal professional can help navigate joint IP complexities, ensuring proper protection and utilization of jointly owned IP assets.

Joint ownership of intellectual property refers to the sharing of intellectual property (IP) rights to a particular invention between two or more parties. It usually occurs as a result of two or more people co-inventing a patentable product, creative work, design, or concept. Since certain issues related to IP are difficult to quantify, disputes between joint owners of a piece of IP can easily arise. In order to prevent disputes, it is important for the owners to establish a joint-ownership IP agreement that clearly describes the allocation of shares of IP between the partners.

Ownership of IP

When you create a patent, you are regarded as an inventor and deserve to be recognized as one. IP rights serve to protect intellectual property and make IP ownership legally recognizable. The exclusive right given for an invention is called a patent.

The owner of a patent has the legal right to decide who can or cannot use the patented invention. He or she may permit the use of the invention or license another party to use the invention in accordance with mutually agreed terms. In addition, he or she may sell the IP rights to the invention to another party, who will, in turn, become the new legal owner of the patent.

In a collaboration that involves an external party, identifying the owners of an invention and the IP rights to it can be a major issue. As such, ownership of the IP rights must be clearly defined in the cooperation agreement's IP terms and conditions section.

Implications of Joint IP Ownership

Joint IP ownership introduces unique implications that affect how the IP can be used, licensed, or sold. Unlike sole ownership, joint owners must often navigate the challenge of securing unanimous consent or, at minimum, agreement from all owners before major decisions can be made regarding the IP’s use. In some cases, joint ownership can limit each owner’s ability to independently license or commercialize the IP, depending on the terms established in the joint agreement. These limitations make it essential to outline specific rights and obligations of each party in a joint IP ownership agreement, including the process for any amendments.

Joint Ownership of IP

Confusion regarding ownership of IP often occurs in joint development arrangements, joint ventures, subcontracting portions of work, and other collaborative projects that involve the development of intellectual property. Examples include software, drug development, medical devices, and other tech-based initiatives. Joint IP ownership may occur when two or more parties co-invent a patent-worthy invention or co-author a work of authorship. It may also result from a compromise in an agreement.

In general, joint ownership is a situation whereby two or more parties own proprietary shares of an asset. In regard to IP, it usually happens in collaborative projects when the partners are jointly responsible for generating the final results and the share of work cannot be easily ascertained.

When determining each party's contribution to the invention, only “active contribution” to the final product should be taken into consideration. Mere efforts are regarded as insufficient for the creation of co-ownership. The sharing of information and ideas and ordinary assistance are also excluded. All contributions should be indivisible elements to the invention or the invention itself should be indivisible. All kinds of IP can be jointly owned, including copyrights, patents, trademarks, and trade secrets.

Common Issues and Challenges in Joint IP Ownership

Joint IP ownership can often present challenges due to the complex nature of shared rights. Some common issues include:

  • Disagreements Over IP Exploitation: Joint owners may have differing goals, leading to conflicts over whether, how, and to whom the IP should be licensed or sold.
  • Jurisdictional Complications: In cases where IP protection varies by country, joint IP ownership may face additional legal challenges, requiring careful legal structuring.
  • Responsibility for Maintenance Costs: Joint owners need to address who will bear the ongoing costs for maintaining the IP rights, such as patent renewals and registrations.
  • Lack of a Clear Dispute Resolution Mechanism: Failing to establish an arbitration or mediation process within the agreement can lead to prolonged legal battles, often costly and damaging to the IP's market potential​.

Joint IP Ownership Agreement

With the number of collaborative research projects on the rise, jointly-created inventions are becoming increasingly ordinary. Partners in collaborative projects should clearly state the terms and conditions of the resulting joint IP ownership in a separate agreement called joint IP ownership agreement. Otherwise, they can create clauses in a general collaboration agreement to regulate the division of co-developed assets.

Simply defined, a joint investor is someone who:

  • Comes up with the idea
  • Contributes materially to the creation of the invention
  • Implements the invention

An executor is someone who:

  • Proposes a hypothesis
  • Performs routine tasks by passively following the instructions
  • Tests the results

While predicting all the results of a collaborative project may not be possible sometimes, the partners should state the expected IP results that will be generated through the collaborative effort before they start conducting any research activity. Such results can be new technology, publications, or a definite product. Upon defining the expected results, they can proceed to address joint ownership of the IP rights by taking the following factors into account:

  • Division of shares between co-owners
  • Terms and conditions for the implementation and exploitation of the IP results
  • Management of the co-owned results

Declaring that all IP resulting from a joint project should be co-owned may seem fair and reasonable, but many implications of co-owned IP are counterintuitive. For example, joint ownership of patent may differ significantly from joint ownership of copyright.

Licensing and Commercializing Joint IP

Jointly owned IP may require specific licensing and commercialization strategies to avoid conflicts. Licensing out jointly owned IP can be particularly complex, as it often requires all owners to agree on the terms. To facilitate this process, a joint IP ownership agreement should:

  1. Outline Licensing Procedures: Clearly specify when and how each party may license the IP to third parties, including any required approval processes.
  2. Define Profit Sharing and Royalties: Include detailed terms for how licensing income or royalties from the IP will be divided among co-owners.
  3. Detail IP Exploitation Rights: Specify whether each owner has the right to independently exploit the IP for personal use or profit without involving other parties.
  4. Consider Non-Exclusive Licenses: Allow for non-exclusive licensing to certain markets or jurisdictions, which may provide flexibility and minimize conflicts.

By including specific licensing guidelines, joint owners can ensure smoother commercialization efforts, allowing each party to benefit from the IP while maintaining clear, mutual terms​.

Dispute Resolution in Joint IP Ownership

Dispute resolution mechanisms are essential for managing disagreements between joint IP owners. Joint IP agreements should address how disputes will be resolved, specifying if parties will engage in negotiation, mediation, arbitration, or litigation. Including an escalation procedure within the agreement can help streamline the process. Ideally, this section should:

  • Define Resolution Pathways: Specify preferred steps, such as mediation before arbitration or litigation, to ensure that parties exhaust collaborative solutions first.
  • Include Arbitration Clauses: For international partnerships, arbitration can often provide a neutral ground for dispute resolution.
  • Address Financial Responsibility for Disputes: Specify which party or parties are responsible for covering legal costs, or if these will be split.

A well-defined dispute resolution strategy can prevent time-consuming litigation, making the IP ownership experience smoother and more manageable​.

If you need help understanding or establishing joint ownership of intellectual property, you can post your legal need in UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard, Yale, and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.