There are many contexts in which intellectual property rights might end up being jointly owned. The law certainly allows two businesses to share intellectual property, work as a joint venture or to participate in collaborative research and development projects, all of which can easily lead to joint ownership of intellectual property. So, two businesses can end up as joint IP owners, and so can a business and an individual such as a consultant or even an employee. Two or more individuals can also jointly own IP, and it’s quite a common outcome with some types of creative work such as songs and films.
In the UK (as well as many EU Member States) co-owners can only exploit the IP themselves—generally, they can't assign or licence their rights without the participation of the other co-owners, which is why it is important to set out the ground rules in an agreement, in advance. On the other hand, joint owners of US patents have a lot more scope to do what they want with them. Differences like this mean that there is no one-size-fits-all solution.
Joint ownership of IP can be a fairly tricky area of law to navigate. If you would like help creating a legally binding agreement between you and other party our intellectual property solicitors can help. Alternatively, we can advise you if you are currently in a dispute with another party over the ownership rights of IP.
Contents:
What are the rules on joint ownership of intellectual property rights?
Copyright
The first owner of copyright is generally the person who creates a work. If two or more people collaborate in creating a single work—a computer program, for example—joint creators will become joint owners (although if they create the program as employees, their employer will probably own the copyright).
However, if the collaborators produce something in which their contributions are distinct, such as an encyclopedia or a song (which comprises music and words), there are multiple copyright works in which each individual creator will have independent nights. It's not joint ownership but it still calls for an agreement between the various participants, to determine to determine how royalties will be shared as well as other matters. A licence of a joint copyright work requires the consent of all the joint owners, which might make it very difficult to exploit. Agreeing how to exploit the work in advance, and documenting the terms of that agreement, is definitely helpful—but it is hard to predict just what you will need to cover, and if the work turns out to be a valuable property the likelihood of disputes about the agreement will increase.
Joint authors also have moral rights—the rights to be identified as the author, and to object to derogatory treatment of their work. These rights, which are inalienable, can be exercised by the holder of the rights without reference to the joint creators.
Design right
Just like copyright work, a design many be created by more than one designer working together. It's important to ask whether they contributed to what design right protects (original features of the appearance of an article) and not some other aspect of the article concerned—the way it works, for example, rather than the way it looks—but if it is a joint design and there are joint owners of design right, the same restrictions apply to what they can do with those rights as for copyright.
Registered designs
When a design meets the requirements for registration (essentially, novelty and individual character) it may gain extra protection by being registered. Two or more people can be joint proprietors of the design. The legislation has less detail compared to copyright or design rights, but the same principle will apply—and again, joint proprietors are well-advised to ensure they have a written agreement about who can do what, in what shares the rights are held, and other matters.
Patents
It is common to find patents for inventions that have been devised collaboratively, and the law recognises that co-inventors may file patent applications together. Each is entitled to an equal, undivided share of the patent or application, and (subject to agreement to the contrary) each co-owner may work the patent for their own benefit. However, they may not licence, assign, or mortgage their share in the patent without the other co-owners’ consent.
Often, a co-owner of a patent may lack the ability of another co-owner to work the patent themselves—which is precisely when they would like to be able to grant a licence, which they cannot do without consent. This is a situation that definitely needs to be dealt with in advance by agreement.
A joint ownership situation could also arise because a share in the patent is transferred to another party. Giving a share in your patent to someone who lends you money or invests in your business is, however, a bad idea: they would be entitled to work the invention (which might not be a big problem, unless they happen to run an engineering business or something similar) – but more importantly could also stop you licensing someone else the use of the patent. Instead of giving away a share, grant a mortgage instead, or if your business is a limited company, let them have shares in the company rather than in the patent.
Trade Marks
It is possible for two or more parties to apply to register a trade mark, or for a share to be assigned to another party. Generally, this not something to do lightly, as it dilutes the ability of the trade mark to identify your business in the market place—but an assignment may be limited to a geographical area, or to only some of the goods or services, for which the trade mark is registered. In each case the parties need a watertight agreement to maintain any boundaries they might have set.
Even worse, fragmented use of a trade mark by multiple owners could mean it becomes misleading, and therefore vulnerable to revocation. Each co-owner has a vested interest in being able to control what other co-owners do with the trade mark.
Each co-owner of a trade mark may use it themselves, but may only assign or licence their rights with the consent of other co-owners.
Problems with jointly using a trade mark could be overcome by creating a joint venture company to own and use the trade mark.
Passing off
The action for passing off protects goodwill rather than directly protecting an unregistered trade mark, so the question is who owns that goodwill? Several cases involve the collective goodwill in the name of a band. The collective nights of the members (or ex-members) can often be used to stop another member performing under the band's name.
Confidential information
Confidential information is not truly a form of property, but it is so closely related to IP that it must be considered here. If two parties have the same confidential information, there is a real danger that it is no longer confidential. A written agreement prohibiting the parties from disclosing the information to anyone else is essential to preserve its status.
Joint intellectual property ownership agreements
It is crucially important to have an express agreement in place to regulate the use of any jointly-owned intellectual property. This must also cover not only IP that exists at the date of the agreement, but also any IP that is created subsequently. Our intellectual property solicitors can prepare a joint IP ownership agreement for your situation.
It is normal in many agreements, such as joint ventures, to divide IP into background IP (which the parties bring to the project from their own resources) and foreground IP (which is created by the joint venture). Identifying what IP falls into each of these categories is an important starting point.
You might find it more satisfactory to give parties licences to use IP rather than making them joint owners – one party could own the IP, thus avoiding joint ownership problems, and grant perpetual, irrevocable, and perhaps royalty-free licences to the others.
Whether there is one owner granting licences to other participants, or multiple joint owners, it is probably going to be important to set out the fields in which parties can exploit the IP, and their rights to grant licences or sub-licences and to assign their rights.
Enforcing jointly-owned IP
Not all the joint owners of a piece of intellectual property must agree before they may sue for infringement, but (unless the other co-owners agree) they must generally join the others as parties to the litigation. That could be either as a claimant, if they are co-operative, or a defendant if they aren’t: and if they are joined as a defendant, they generally will not become liable for costs unless they take part in the proceedings.
Any damages awarded for the infringement will be apportioned between the owners according to their share in the IP. A joint owner who does something like granting a licence without the consent of the other owner or owners commits an infringement and the others who own the IP with them will be able to sue for infringement.
Summary
If you own any IP jointly with someone else, a joint ownership of IP agreement defining the rights and obligations of the joint owners is essential. The applicable statutes just don’t give you the certainty you need. One of our experienced intellectual property solicitors can help draft a bespoke, legal binding agreement between you and another party. Our solicitors can also help resolve a dispute that occurs between two parties that jointly own IP. Contact us today using the form below and a member of our team will be in touch with you later today.
