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.
- Last reviewed: 26 Sep 2020
- Last updated: 17 Dec 2013