The Joint Ownership Trap

Parties contemplating a collaboration will often enter heated negotiations about who is to own future IP. To resolve the deadlock, they sometimes adopt a halfway position that results in "joint ownership" of newly developed IP. This can result in several problems.


First, pure joint ownership will usually require unanimous agreement on use of the IP by both parties. This means that use and exploitation of anything drawing on that IP will be restricted.

Second, there are practical issues to contend with even if the ownership is expressed in the agreement to be a tenancy in common arrangement. There is always an open question about whether both parties have all components of the relevant IP, and whether they've properly disclosed it to one another. Often these questions aren't answered until the exploitation has occurred and profits have been derived.

These situations can be avoided. In most collaborations, it is fairly easy to identify where the ownership split should lie. Unless the parties are identical in the scope of their activities, it should be clear which components of IP will be of value to each party. A conceptual split of the future IP can be built into the collaboration agreement catering for this. Alternatively, if that isn't the case, perhaps a new joint-venture entity should be considered. Of course, any new structure should be set up with appropriate mechanisms for dealing with contentious issues.

Or, perhaps consider dropping the ownership question altogether – but more on this aspect in a later post.