Sorting Out Ownership of Inventive Developments Before Entering Into Collaborative Arrangements

The simplest ownership/inventorship situation in the world of patents is a single inventor who is also the applicant.  However, usually two or more inventors are involved, and typically one or more of those inventors have assigned, or are obliged to assign their rights in and to the invention to one or more other parties.  This is where patent applications (or even granted patents) can come to grief, often because of a failure to formalise who owns what, who invented what (and who merely contributed), and/or to safeguard the relevant paperwork.

A common scenario, especially with smaller applicants with limited IP experience, involves collaboration amongst separate legal entities.  In such cases, at least at the beginning of the relationship, good will and trust between the parties often abound and, as a result, a confidentiality or non-disclosure agreement is all that is executed, at best (sometimes not even that).  Unfortunately, one party may develop a view of contributions towards an invention that may differ from the views of other parties involved.  Disagreements as to whether any information is actually confidential or not may also arise.

As an example consider this scenario.  Inventor I who owns party A is trying to develop a solution to a problem in their industry and have a good idea as to what they are looking for, but do not have the resources or experience necessary to explore potential solutions, so they approach party B, who do have the necessary resources and experience.  In-person meetings and e-mail exchanges take place, and trials are carried out, eventually resulting in a working solution, at which point party A approaches party B with a view to execute a confidentiality agreement at the same time as filing a provisional patent application naming only inventor I as inventor and party A as applicant.  Several years later, and out of the blue party B opposes grant of a patent on the Australian patent application (including arguments that none of the information exchanged was confidential anyway and, even if it was, their people were the inventors, not inventor A) and refuses to sign assignments and POA forms for a US patent application.

In a slightly different scenario parties A and B have an extensive history of working together, with party B on various occasions assigning rights to any inventions arising from a project through a collaboration agreement.  However, in relation to one project, although the collaboration agreement had been drafted, it had not actually been finalised or signed by party B, and party B refuses to sign an assignment at a later date.

Unfortunately, in these scenarios party A is in for a rude shock:  even if they can get party B to assign eventually, it may be too late in some jurisdictions, and if they can’t get party B to assign at all, then the patent application, or a patent granted on it may be invalid in most, if not all other countries (depending on the specifics and local laws).

Yet a different scenario may arise where party A brings a certain amount of IP to a project, as does party B, but at a later date party B lays claim to aspects of an invention that really only exists because of IP brought to the table by party A .  Unfortunately, if party A cannot show proof of having brought that IP to the project, and there is no collaboration agreement clearly setting out what each party brought to the project, this situation may get quite unpleasant and may not be resolved satisfactorily for one or both parties.

And there are many other potential scenarios – the overall take-home message here is that, where collaborations are involved in development of an invention, it is very important to identify which party brings what background IP to the project, and who will own what IP arising out of the project, as well as apportionment of costs, obligations (including non-disclosure), provision of plant and materials, exit clauses, etc.  This is best done via a formalised agreement document which sets these features out clearly, and in a manner agreed to (and signed) by all parties BEFORE starting work on the project.  Once that paperwork is finalised and signed, it needs to be kept/stored somewhere safe and from which it can be readily retrieved (yes, there is a scenario where the paperwork was believed to exist but could not be found, and which an inventor, who was not employed by the Applicant, says he never signed …).

Once protectable IP has been developed and identified, inventorship needs to be determined, and this may well retrospectively affect outcomes of collaboration agreements (and who owns what).  Care needs to be taken here as well even if there is only one applicant, as incorrectly including or omitting inventors can lead to invalidation of patent properties as well (and ‘omitted’ inventors have been known to bring actions).

Engagement of a good IP commercialisation lawyer to assist with, at least, preparation of relevant agreement documents prior to starting collaborative work is highly advisable in the author’s view: while engagement of commercialisation lawyers may be seen by some to involve large and unnecessary expense, making sure you have the right paperwork in place, and terms agreed to, can make the difference between having and not having IP after incurring large expenses associated with R&D.

At the end of the day, it is critical to know who owns which pieces of IP.  The only way to reliably achieve that is by attending to the necessary housekeeping along the way.


David Myers

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