So your company has cooked up a new product idea just ripe for the market. You’ve found the perfect partner to help execute the project. Everyone is pumped about the potential for success and eager to get the project off the ground.
Odds are that you were careful to sign NDAs with the various potential partners you evaluated including the one you selected so it should be safe to go ahead, right? But wait! Before you go any further, you need to establish who owns the intellectual property (including know-how, trade secrets and other non-patentable ideas). In fact, before meeting with any potential partners it would have been safer to define clearly what IP you are bringing into the project ( “background IP” in legalese) to avoid any ambiguity. Your partner will also want to clearly identify what they are bringing into the project. Make sure you do this before you start talking about your big idea!
Once the background IP of each party is spelled out, you then need to agree on who owns the IP “jointly created” during the project. Even if you are paying for all the development you won’t necessarily own the rights to the IP unless it is agreed upon upfront. You should also agree who will prosecute patentable inventions (filing, examination, maintenance and other fees), who will be allowed to license the patents when issued, who will get royalties, who will decide the inventorship, etc.
There’s a lot to think about but take the time to document things before the project gets underway. Once the inevitable project speed bumps occur (delays, technical problems, cost overruns, personality conflicts and so on) the tensions in the partnership make IP discussions a lot more difficult. And as the prospects for financial success of the project become clearer, the stakes get higher. The last thing you want is to have your product launch stalled by expensive legal proceedings to sort our IP ownership!
You wouldn’t get married without having an honest discussion about where you want to live, how many children you’d like and how the family finances will be handled – a joint venture project should be no different!