IP Review Winter 2018/19

5 4 What can go wrong? It is unfortunately very easy to set out on a project without having sufficiently considered in advance the IP implications of the collaborative relationships which are involved. Unexpected, and often detrimental, outcomes which can arise include: Lost IP If contractors develop one or more aspects of core IP in a project without suitable IP clauses in their contracts, they may subsequently leave with ownership of that IP. The client is potentially left having to buy the rights after the event at an elevated price. In one anecdotal case, a creative agency, made up almost entirely of freelancers working on their own hardware, reportedly lost all of a major project’s IP and materials when the freelancers walked out. The agency was still contractually obliged to deliver the project to the end client despite having no control over the IP generated by the freelancers. Wrongly allocated IP If IP ownership and exclusivity terms in a development contract do not set out which party can use what parts of the arising IP, and don’t define a mechanism for agreeing between the parties how exploitation rights are to be divided up, later misunderstandings can arise. In a case in the domain of Superyacht construction, a shipyard found itself being sued by a former client for allegedly re-using intellectual property, which had been exclusively licensed to that former client, on a new project. The shipyard was therefore found to infringe IP which they themselves had generated and exclusively licensed away. Unclear ownership If it is not clearly defined from the outset who will be claiming, exploiting and managing intellectual property, misunderstandings can arise over which party can rightly claim ownership of which parts of the joint development. Subsequent un- picking, re-assignment or re-licensing of registered IP rights to settle the dispute later down the line can be complex and expensive to resolve. Uncertain liability When taking on development work under a client’s direction, a supplier or product development agency can unwittingly find itself liable for infringements of third-party IP rights. It is therefore important to understand from the outset of a project who is liable for any IP infringements and which party will be responsible for assessing and managing the related infringement risks. Why does it go wrong? There are many reasons why things can go wrong, but one which can arise is a desire to simply get on with the development project and worry about IP issues later. Another is a lack of appreciation on the project team of the extent of the IP issues which need addressing. Even where IP matters have been considered, the issue of scope-creep in a project can still cause initially-suitable IP terms to cease to be fit for the project. Steps to help avoid issues Seek clarity from the outset Defining, from the outset, how to address the issues of IP ownership, management, maintenance, exploitation, enforcement and liability for third party infringements can go a long way to avoiding later disagreements during or after a project. IP review winter 2018/19 Protect your position Know what IP you bring to the project and make clear what’s yours from the outset. Create a clear background IP log. Where possible, file for IP registrations to claim what is yours before sharing information about your IP with a collaborator. In any case, open initial discussions under a Non- Disclosure Agreement (NDA). Ensure internal processes are in place to log and capture IP before it is shared with collaborators. Control and freedom to exploit is important Agreeing a simple answer of who will have actual ownership of arising IP may not of itself result in the best outcome for all parties. Freedom to exploit the IP, regardless of ownership, is often more important. Be prepared to discuss and agree what parts of the overall resulting IP you will need to exploit to carry on your business, in which geographies and in which industry sectors. Prepare to share Once all parties have set out how and where they need to exploit the IP, a relatively flexible dividing- out of the right to exploit the IP in different industry sectors and/or in different geographies for each party, with suitable licence fee payments as appropriate, may provide the best overall benefit to all of the collaborators. Conclusion Whatever the type of collaborative project, IP issues risk hindering a project if things go wrong, but can significantly contribute to the success of the project if managed well. However, core to this is effective identification, protection and management of IP rights being generated, by all parties, throughout the collaborative project. Having a patent attorney on board to help with this from the outset can help to ensure maximum value is gained from the IP generated in the project. Defining, from the outset, how to address the issues of IP ownership, management, maintenance, exploitation, enforcement and liability for third party infringements can go a long way to avoiding later disagreements during or after a project. By Russell Edson redson@withersrogers.com