Get your IP contract straight before entering into collaborations

For those in research and development, ‘collaboration’ can often be two parties working together to a common aim – for example combining proprietary IP to move technology forward, enable further research or to look at new markets for applications of technology.

For those in consumer focused sectors, it can mean brand collaborations. This brings together two brands (sometimes unusual combinations, think Primark and Greggs) to provide a new product service range to consumers or cross promotion of existing products/services.

Whichever collaboration ‘type’ your business is considering, there are common considerations and it is fundamental to have a clear contract in place before the collaboration gets underway.

At the heart of many collaborations is IP, be that registered rights such as patents and trade marks or unregistered rights such as copyright and trade secrets.

IP will include that which each party brings to the collaboration, ‘background IP’ and any newly created IP within the collaboration, ‘project IP’. Both background and project IP will have seen considerable time (and money) being built up. This needs to be contractually protected. Here are some considerations in relation to IP for any collaboration agreement.

Is the match a good one?

This is a fundamental question: are the businesses’ ethos the same? This can be of particular importance for those involved in brand collaborations. If a company brand is built on an ethical standpoint or commitment to a manner of working, a misaligned collaboration could undermine the essence of the business and result in reputational damage.

To this end, not only is there a need to carry out full due diligence at the outset, but also ensure that there is a means to address any misalignment (for example comments by the other party, or some information comes to light which is at odds with an ethical standpoint) which comes out during the term of the collaboration.

Therefore, not only would it be important to outline the ability to terminate the collaboration contract should this issue come up, but also include guidelines on conduct and use of the background IP.

Identifying the background IP

Make sure that the background IP is clearly explained and identified so that there cannot be any dispute as to what was brought in by a particular party. This is particularly relevant where any project IP may be closely linked to, or a progression of, background IP.

When drafting the provisions for background IP, it is worth reviewing what IP a party believes they are bringing to the collaboration and considering whether that IP is capable of being protected as a registered right. If so, has the registration been applied for, and if it has not, do you have other provisions in place to clearly define the IP, how it was created and, if appropriate, are there confidentiality measures in place to protect against disclosure?

A licence for the IP

If the other party is going to need to use background IP as part of the collaboration there should be a licence within the contract to reflect permitted use both during the term of the collaboration and post the end of the collaboration.

If use is to terminate at the end of the term of the contract (whether the end is as a result of the collaboration or due to a breach of the contract) then this should be made clear and provisions for any actions which must be taken by the licensee when the licence terminates should also be included. If there is to be project IP, the contract needs to record which party(ies) are going to own the IP and the use of the project IP going forward by the parties.

If only one party is to be the project IP owner, is the other party to have a licence to use the project IP? If so, what are the terms of the licence, for example is it to be a free licence which cannot be terminated; is it a licence for certain activities only; or can all parties use the project IP for commercial exploitation going forward.

There should also be provisions for ensuring registration of the IP where appropriate, payment in relation to renewals of registrations, any public facing information and to reflect the parties’ involvement.

There are many benefits of collaborations: it can allow quicker commercialisation of a new technology; allow a smaller entity access to the resources of a larger/wealthier entity; in brand collaborations it opens up an entirely new customer base; profile raising in the same or a new market place; a well-established brand can demonstrate its connection to current trends/current events; or taking technology into a new sector.

To ensure that those benefits do not subsequently undermine your IP the key is to get a clear contract in place at the outset.

• You can call Maria Peyman at Birketts’ Cambridge office on +44 1223 326 596 or email her: maria-peyman@birketts.co.uk