Collaborative Intellectual Property Understanding Critical Issues with Joint

Collaborative Intellectual Property Understanding Critical Issues with Joint Development Agreements Peter Lando 17 th Annual Advanced Licensing Institute at Pierce Law January 9, 2009 © 2009 Lowrie, Lando & Anastasi, LLP

Background • Collaboration -- basis – New considerations – Current IP landscape • Strategies

Collaborative IP In most industries, new technologies – and products and services utilizing those technologies – are necessary to establish and/or maintain a competitive advantage. © 2009 Lowrie, Lando & Anastasi, LLP

Collaborative IP In addition to the economic rationale to expand a company’s technology base and commercial products, – collaboration can pay dividends by bringing longer term value to a company, and – current issues in IP may influence more companies to explore technology collaborations. © 2009 Lowrie, Lando & Anastasi, LLP

New Considerations* All about relationships: – Can be more important than money. – Innovation has become more heterogeneous, technologies more interconnected. – A top strategy for accelerating innovation is to increase licensing and other IP-enabled collaboration with outside firms. *“New Rules for Licensing In A New World, ” Marshall Phelps, published in les Nouvelles, March 2008 © 2009 Lowrie, Lando & Anastasi, LLP

New Considerations Relationships – making and nurturing them – will drive “new rules” for licensing: – – – – IP should serve the business Leverage inclusivity Value over money Package IP Collaboration Sell and buy Look beyond the usual suspects Competitor alliances © 2009 Lowrie, Lando & Anastasi, LLP

IP Landscape • History • Last 5 – 10 years • Current IP Landscape

Collaboration Strategies Non-competitors Suppliers Customers Indirect competitors © 2009 Lowrie, Lando & Anastasi, LLP

Joint Development Agreements • Many companies choose to enter into Joint Development projects to join assets and work as a partnership to achieve and create something new of value to both parties. • Structuring these agreements – particularly the IP aspects therein – can be challenging. © 2009 Lowrie, Lando & Anastasi, LLP

Joint Development Agreements Usually a written contract between two or more parties that agree to collaborate and develop IP, wherein each party brings something of value (a complementary proprietary technology, resource and/or expertise) to achieve a stated objective. The agreement will typically include terms to govern the relationship and the mechanisms for the parties to exploit the developed IP individually or together through a separate entity. © 2009 Lowrie, Lando & Anastasi, LLP

Determining IP Rights Defined • Background IP – Prior to the JDA • Developed

Background IP in JDA • For performance of development obligations and to exploit developed IP and to avoid conflict. • Usually not controversial to define. – More specific the better. • Consider use of list or table in the JDA or as an appendix to identify background IP. © 2009 Lowrie, Lando & Anastasi, LLP

Background IP in JDA • Example (simple): “Background intellectual property rights means any and all confidential and proprietary information, whether patentable, copyrightable, or not, created or obtained by each party prior to the effective date of this agreement. ” © 2009 Lowrie, Lando & Anastasi, LLP

Background IP in JDA • Example (more interesting): “Background intellectual property rights means, without limitation, inventions, patents, registered designs, trademarks (whether registered or unregistered), service marks, copyright (in software or otherwise), unregistered design rights, industrial property, technical developments, know-how and other confidential and proprietary knowledge and information and, where appropriate, applications for the same, that specifically relates to WIDGETS, as defined herein, and which is owned by or licensed to one or more of the parties and was either (a) created prior to the effective date of this Agreement; or (b) was created after the effective date of this Agreement, but not as a result of the performance of the parties’ obligations under this Agreement. ” © 2009 Lowrie, Lando & Anastasi, LLP

Developed IP in JDA • Important to agree what will be considered jointly developed intellectual property. – May determine ownership, use and control of IP rights during and after termination of the JDA. • Sometimes difficult to determine when one party develops the IP independent of the other during the JDA. – How independent was the party? © 2009 Lowrie, Lando & Anastasi, LLP

Developed IP in JDA • Jointly developed intellectual property (sometimes referred to as foreground IP) could be defined as any IP related to the shared objective that is developed by either party during the term of the JDA. © 2009 Lowrie, Lando & Anastasi, LLP

Developed IP in JDA • Example “Foreground intellectual property rights means, without limitation, inventions, patents, registered designs, trademarks (whether registered or unregistered), service marks, copyright (in software or otherwise), unregistered design rights, industrial property, technical developments, know-how and other confidential and proprietary knowledge and information and, where appropriate, applications for the same, related to WIDGETS, as defined herein, which is generated during the term as a result of one or more parties or their agents or subcontractors. ” © 2009 Lowrie, Lando & Anastasi, LLP

Developed IP in JDA • JDA may alternatively have separate definitions for truly jointly developed IP and independently developed IP. –. . . jointly by the parties or their agents or subcontractors related to the shared objective of the JDA. –. . . independently of the other party and not related to the shared objective JDA. © 2009 Lowrie, Lando & Anastasi, LLP

Ownership of IP in JDA • Ownership of IP arising out of development work can be divided in a wide variety of ways. • Most commonly (default) ownership follows inventorship. – IP created solely by a party is owned by that party (and licenses its use to the other party to the JDA), and – IP created jointly by the parties is jointly owned. © 2009 Lowrie, Lando & Anastasi, LLP

Ownership of IP in JDA • Alternatives may include ownership based on other factors, regardless of inventorship (may require assignments and licenses within the JDA). – Technology areas (fields of use) – Funding – Markets – Territories © 2009 Lowrie, Lando & Anastasi, LLP

Joint Ownership of IP in JDA • Absent express agreement, setting forth rights, restrictions, and obligations of each party, the statute and case law present legal issues for jointly owned IP (particularly in the context of patents/inventions) that can be avoided. © 2009 Lowrie, Lando & Anastasi, LLP

Joint Ownership • Inventorship is a “muddy” determination (may require third party determinations). • To be considered a joint inventor an individual needs to only make a contribution to only a single claim of a patent. • Each co-inventor (and co-owner) owns an undivided interest in the entire patent and can independently use and (non-exclusively) license the patent/invention without accounting to the other co-inventor/owner. • Co-owner may assign patent rights without consent. • However, co-owner cannot sue infringers without consent. © 2009 Lowrie, Lando & Anastasi, LLP

Ownership of IP in JDA • Another option is an assignment to a separate legal joint venture entity. – Important to assign all relevant background IP to the separate entity as well. • However addressed, ownership is important to clarify in the JDA. – Any assignment of patent rights must be properly drafted. © 2009 Lowrie, Lando & Anastasi, LLP

Use of IP in JDA • Party typically wants to use what the other party owns. • Common for parties in a JDA to license IP to each other to address objectives of the agreement. • Licenses frequently include restrictions. – – Field of use, Timing, Payments, Sub-licensing © 2009 Lowrie, Lando & Anastasi, LLP

Control of IP in JDA • Responsibilities of ownership of IP – Enforcement of IP • Rights/control • Expenses • Recovery – File, prosecute and maintain patent applications. • Rights/control • Expenses © 2009 Lowrie, Lando & Anastasi, LLP

General Considerations in JDA • Contributions of each party – Scope of the work (objectives); where, when, by whom; schedules; and contacts. • Confidential information – Further disclosures and its use. – Timing and scope. – Competitive risks. • Expenses © 2009 Lowrie, Lando & Anastasi, LLP

General Considerations in JDA • Termination – How and when a party may terminate. – Ownership of pending developed IP. – Continuing rights and obligations. – Improvements. – Further business relations • Dispute resolution – Breach/remedy/repair. © 2009 Lowrie, Lando & Anastasi, LLP