• Startups
  • October 28, 2021

Intellectual Property Issues Related to Joint Ventures


By Lawbite Team

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One of the main reasons to enter into a joint venture (JV) is to enable both parties to take advantage of the intellectual property (IP) available under the agreement.  IP in this sense can take several forms, including industrial designs, patents, trademarks, and copyrights.  IP issues and problems are, unfortunately, not uncommon when it comes to JVs; however, by drawing up a clear and concise JV agreement that sets out the ownership and terms of use of any IP, this can be avoided.  Some of the issues which may arise include:

IP licencing issues

In many cases, a JV will utilise the IP owned by a parent company – doing so is one of the many reasons to enter into a JV in the first place.  The risk of not licencing IP correctly is that it may not be used in the agreed way, or it may be at risk of being copied.  Rather than transferring the IP ownership to the JV, it is more typical for the parent company to retain ownership and simply license its use to the JV.  By doing so, if the JV does not succeed, the IP is retained by its original owner.  It is important for a written licencing agreement to be reached and the description/ownership of any technology to be included in the JV agreement.  Where the JV creates new IP, an agreement also needs to be reached as to how this should be licenced.  Parties to a JV should also consider what happens if the parent company develops or gains access to new IP not available at the outset of the JV and whether IP should be automatically licenced?

Competition issues

IP and competition law are closely related, largely because exercising IP rights can, in some cases, breach competition law.  One of the benefits of joint ventures, however, is that it may be possible to make use of the Technology Transfer block law (under competition law) which provides an exemption from anti-competition law when transferring technology.

Exit issues

Another key consideration is what will happen to IP when exiting the joint venture.  Questions that need to be considered include:

  • What will happen to the property rights of the parent company if these have been licensed to the JV?
  • What will happen to IP developed and owned by the JV?
  • What happens to IP licenses in the event of a default by a party to the JV – from the perspective of the non-defaulting and defaulting party?
  • Under which circumstances can IP continue to be used if a JV is terminated, but the party concerned did not technically default on the agreement?

The above are just some of the many potential IP related issues which should be considered, and potential resolutions set out from the start of the venture.

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In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.

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