If there’s anything tougher than developing meaningful Intellectual Property (IP), it’s protecting it. This seems to be especially true when Joint Development Agreements (JDAs) are involved. And, as they say, always have a plan in place for the inevitable divorce! JDAs can be a necessary component of research, development and ultimate commercialization of technologies. When one company can’t financially or technologically support development of the desired technology, they need to look to another company – often a competitor – to share the development workload and the associated risk/reward. Proper intellectual property and ownership provisions are critical to JDAs where new technologies develop. Here are some guidelines that can be very helpful.
First of all, negotiate carefully. Make absolutely certain you understand exactly who owns exactly what part of the IP, including Background IP, Foreground IP, and Independent IP. And, remember, if you own the intellectual property you’ll likely be responsible for patent prosecution and defending allegations of infringement. But you’ll also be entitled to the benefits of ownership.
Before you enter a JDA, make sure you understand what it means. A joint owner can commercialize or license jointly owned technology without permission from or obligation to share royalties with other joint owners, which is often undesirable. And without a specific agreement or assignment obligation, joint ownership is “default” for joint invention conceived by parties to a JDA. Enter any JDA with your eyes wide open.
Next, be sure to consider the downstream value and use of the IP in question during the negotiations phase. Your JDA “partner” isn’t going to renegotiate with you after execution. Problems related to each party’s rights to use existing and new IP can arise after the JDA has been signed and even after it’s been terminated. Don’t limit ownership or rights to upstream value while ignoring downstream use. Make sure you have iron-clad rules in place to protect each party and to clarify each party’s rights for all IP.
Once you’ve entered into an agreement, be strongly risk-averse when disclosing IP-related subject matter, particularly when it is not subject to patent protection. You don’t want to inadvertently divulge confidential or proprietary information to your JDA partner if there are no confidentiality obligations and the confidential or proprietary information is not otherwise protected.
And maybe this should be the very first guideline in any JDA negotiation: Choose your partner wisely. Know who you’re dealing with – the company’s values, the quality of its products and its people, its reputation with customers and competitors. Trust – with verifiable oversight – is at the heart of any JDA. Without real trust on both sides of the agreement, the target technology is unlikely to materialize and the agreement is unlikely to succeed. Be sure to consider potential post-termination issues from the outset, just in case.
Protecting your Intellectual Property is always an issue. It becomes a particular concern in a Joint Development Agreement. Protect yourself. Carefully managing the risk from the very beginning is not just smart, it’s mandatory. Used right and done right, JDAs can be hugely successful tools and extremely worthwhile undertakings for companies in the technology sector. They are complex and time consuming but, when correctly prepared, they can expedite development and commercialization of new technologies.