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Your rights as a joint owner of intellectual property

How does joint ownership of intellectual property arise?

The joint ownership of intellectual property can arise in 2 different ways:

  1. An agreement may provide that intellectual property will be owned jointly by the parties, regardless of whether they were joint authors, joint inventors or joint creators.
  2. The parties may contribute jointly to the creation of the intellectual property and so are joint authors, joint inventors or joint creators.

What should an agreement address if there is to be joint ownership?

Sometimes, parties have an agreement, and agree on joint ownership of the intellectual property, but do not regulate their joint ownership relationship any further.

If joint ownership is to be agreed, it is critical that the agreement also address the following 3 questions:

  1. Can a joint owner exploit the jointly owned intellectual property?
    1. only with, or without the need for, the other joint owner's consent?
    2. only with the obligation, or without the obligation, to pay royalties (or other fees)?
  2. Can a joint owner grant a licence of the jointly owned intellectual property to another person?
    1. only with, or without the need for, the other joint owner's consent?
    2. only with the obligation, or without the obligation, to share the royalties (or other fees) received from the licensee?
  3. Can a joint owner assign its share of the jointly owned intellectual property to another person only with, or without the need for, the other joint owner's consent?

If an agreement does not address these questions, the joint owners will be regulated by the different and sometimes inconsistent laws that apply in relation to joint ownership.

It is therefore always prudent to specifically address the 3 questions above in your agreement, so that the jointly owned intellectual property is regulated in the manner that the joint owners agree, instead of the sometimes unpredictable and disadvantageous way that the law might regulate the jointly owned intellectual property.

Ownership proportion

The other matter that an agreement should specifically address is the ownership proportions held by the joint owners.

If the parties do not specify a joint ownership proportion, it will be presumed that they are equal joint owners.

However, joint owners do not always seek to be equal joint owners. Sometimes, one may make a larger contribution than the other (in money, resources, or an innovative contribution), which may justify an unequal ownership proportion.

In that case, it will be important to specify what the joint ownership proportion will be, or how it is to be determined, to avoid it being presumed to be equal.

What are the implications of the joint ownership of a patent?

Unless the joint owners of a patent agree otherwise, the law provides they have equal shares in the patent and can exploit it for their own benefit without accounting to each other. However, 1 owner cannot grant a licence under the patent, or assign an interest in it, without the consent of the other owner.

Now let's consider the case of 2 joint owners who collaborated on a project and expected their relationship, because it was based on joint ownership, to be joint, mutual, and with equal benefits.

They either:

  1. had no agreement governing their joint ownership rights, or
  2. had an agreement, but were silent on their respective joint ownership rights.

That being the case, the law will step in to provide a default position on 3 critical questions:

1 Can a joint owner of a patent exploit the patent without the consent of the other joint owner, and without accounting to the other joint owner for any of the profits from doing so? Yes
2 Can a joint owner of a patent assign its interest in the patent without the consent of the other joint owner? No
3 Can a joint owner of a patent grant a licence of the patent without the consent of the other joint owner? No

One joint owner is a large company ('L') with manufacturing, marketing and selling capability.

The other joint owner has a small family company ('S') without that manufacturing, marketing and selling capability.

They can both exploit the patent and retain the profits, without accounting to the other for those profits.

L has the capability to do so, but S does not.

S asks L for permission for S to grant a licence to another person, but because that would result in L having a competitor to contend with, L declines.

S and L expected their joint ownership relationship to be one of joint and mutual equal benefits.

But practically, L has all the benefits of ownership, and S has none.

The lesson is that it is not desirable to be silent on these issues of exploitation, assignment and licensing, but rather, to specifically address them, and for a joint ownership agreement to regulate in an agreed manner the respective rights of the joint owners in relation to these 3 critical questions.

What are the implications of the joint ownership of copyright?

Now let's consider the case of 2 software engineers, or other authors who jointly write a copyright work, and therefore jointly own the copyright in that work.

Again, they expect their relationship, because it was based on joint ownership, to be joint, mutual, and with equal benefits.

As before, they either:

  1. had no agreement governing their joint ownership rights, or
  2. had an agreement, but it was silent on their respective joint ownership rights.

That being the case, the law will step in to provide a default position on 3 critical questions:

1 Can a joint owner of copyright exploit (copy or reproduce) the copyright work without the consent of the other joint owner and without accounting to the other joint owner for any of the profits from doing so? No
2 Can a joint owner of a copyright work assign its interest in the copyright work without the consent of the other joint owner? No
3 Can a joint owner of a copyright work grant an exclusive license of the copyright work without the consent of the other joint owner? No

The result now is that neither joint owner can realise any economic benefits whatsoever, without them doing so together.

Sometimes this might operate fairly, ensuring that the joint owners benefit together.

But it could just as likely operate unfairly, with an uncooperative joint owner placing roadblocks that prevent the joint owners realising economic benefits from their joint copyright.

The lesson is that it is not desirable to be silent on these issues of exploitation, assignment and licensing, but rather, to specifically address them, and for a joint ownership agreement to regulate in an agreed manner the respective rights of the joint owners in relation to these 3 critical questions.

What are the implications of the joint ownership of trade secrets, know-how and confidential information?

Trade secrets, know-how and confidential information are not 'property' so it is not entirely accurate to ascribe to them any joint ownership characteristic, but we nevertheless need to do so.

It is not unusual for a collaboration agreement to broadly describe 'intellectual property' in a way that includes trade secrets, know-how and confidential information, and for a provision to be included in the collaboration agreement stating that all intellectual property will be jointly owned.

Suppose that the only outputs of the collaboration are trade secrets, know-how and confidential information.

The collaborators having agreed that all 'intellectual property', including trade secrets, know-how and confidential information were to be jointly owned, what meaning is to be given to those terms?

The relationship between the collaborators could be described as one of confidence - dealing as it were with confidential information.

The use or disclosure of the confidential information by one collaborator, without the sanction of the other, could well destroy the confidential character of the confidential information.

A court would therefore be likely to step in, to prevent the confidential character of the information being destroyed if the other collaborator had not consented to its use.

That being the case, these 3 questions might well be answered by a court in the following way:

1 Can a 'joint owner' of confidential information exploit (copy/reproduce) it without the consent of the other 'joint owner', and without accounting to the other joint owner for any of the profits from doing so? No
2 Can a 'joint owner' of confidential information assign their interest in the confidential information  without the consent of the other 'joint owner'? No
3 Can a 'joint owner' of confidential information grant an exclusive licence of the confidential information (a know-how licence) without the consent of the other joint owner? No

These questions are answered in a similar way to those answered in relation to copyright.

The result again is that neither 'joint owner' is able to realise any economic benefits whatsoever, without acting together.

Sometimes this situation might operate fairly, ensuring that the 'joint owners' benefit together.

But it could just as likely operate unfairly, with an uncooperative 'joint owner' impeding the joint owners realising economic benefits from their joint copyright.

The lesson, again, is that it is not desirable to be silent on these issues of exploitation, assignment and licensing, but rather, to specifically address them, and for a joint ownership agreement to regulate in an agreed manner the respective rights of the joint owners in relation to these 3 critical questions.

What are the implications of joint ownership of trademarks, designs etc?

What are the implications of joint ownership of trademarks, designs, integrated circuits, or plant varieties?

Each of these categories of intellectual property is governed by its own legislation.

However, none of the 4 relevant pieces of legislation deals with joint ownership.

If there was joint ownership of any of these types of intellectual property, it could be the outcome of the joint owners being partners, or again, standing in relation to each other in a position of trust and confidence, as is the case with confidential information.

That being so, where the joint owners are silent about their respective rights and obligations as joint owners of intellectual property, the position may be not unlike that which applies in relation to copyright, and confidential information, that is:

1 Can a joint owner of the intellectual property exploit (copy/reproduce) it without the consent of the other joint owner, and without accounting to the other joint owner for any of the profits from doing so? No
2 Can a joint owner of the intellectual property work assign its interest in the intellectual property work without the consent of the other joint owner? No
3 Can a joint owner of the intellectual property grant an exclusive licence of the intellectual property (a know- how licence) without the consent of the other joint owner? No

The result again is that neither 'joint owner' can realise any economic benefits whatsoever, without doing so together.

The lesson, again, is that it is not desirable to be silent on these issues of exploitation, assignment and licensing, but rather, to specifically address them, and for a joint ownership agreement to regulate in an agreed manner the respective rights of the joint owners in relation to these 3 critical questions.