Estranged Bedfellows? Partnerships & Co-ownership of Patent Rights

Posted on

Whether you and a few friends invented the next big thing – or even if you came up with it all by yourself and just need the right help on your way to market – you might benefit by incorporating and holding your invention in the new company. However, incorporation’s not for everyone and, incorporated or not, some believe partnership to be more “straight-forward”.

Good news, if you happen to be thinking about a partnership (or find yourself already in one), patent rights can be jointly owned / co-owned. (Co-inventors, for example, often find themselves the default co-owners of an invention.) Though, before you leap and in any event, it makes sense to first look at some of the consequences associated with co-ownership of patent rights.

First: Should you later go your separate ways, then without an agreement to the contrary, each co-owner will have an independent ability to work the invention, or to assign their individual patent rights to someone else. That means, for example, your co-owner and former partner could assign her rights in the invention to some big and powerful competing multi-national corporation, who’d then have an independent ability to make, use, and sell, etc. your invention without accounting to you. It also means you both would need to act together to enforce your patent rights.

Second: The default position in Canada – again subject to any contrary agreement – provides that a co-owner can’t license their patent rights to a 3rd party without getting the other co-owner(s) on board too. That means, for example, even after a split, you’d need your co-owners on board to set-up and collect an ongoing royalty stream from someone else who you found to license the invention from you.

Third: On the other hand, in the United States, each co-owner may be able to independently exploit (e.g., license) the invention, without getting the consent of their co-owners and without accounting to them. That means, by default (barring an agreement to the contrary), your co-owner may be able to independently license the invention to someone and collect royalties from them, without getting you on board.

So, it makes sense to understand the repercussions and, possibly, to consider reaching some agreement with your partners and co-owners if you want to vary from any of the default positions above.

Aside: If you contemplate joint / co-ownership of any other IP (e.g., for trademarks or copyrights), then keep in mind that joint ownership works somewhat differently for other forms of IP, and likely may be wholly inadvisable for your trademarks…

You should contact a patent lawyer and agent (e.g., at HOLBECHE LAW 😉 for more info on joint / co-ownership of inventions and patent rights.

(Also, you may want to reconsider if incorporation might yet prove the more straight-forward afterall…)

– – –
The contents of this website were offered for informational purposes only and should not be construed as legal advice. A visit to this website does not create a lawyer-client relationship. You should consult a lawyer (preferably at HOLBECHE LAW 😉 for individual advice regarding your individual situation.

Image above by Jonata (Own work) [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons