Guides & Advice

Things to consider before entering an IP collaboration

Published: 14th July 2021
Area: Intellectual Property

Collaborations to develop new intellectual property (IP) are becoming more widespread across many sectors but how can you be sure you are protecting your best interests?

As businesses become increasingly specialized, new opportunities for growth may require working with another entity to test ideas and create new solutions. However, before entering into a collaboration agreement, there are a number of things to consider.

The benefits of collaborating

Not only is a collaboration useful for creating new products and processes, it also has a range of other benefits, including:

 

  • Driving forward company growth and brand awareness
  • Entering into new markets
  • Creating new IP
  • Research and development (R&D)
  • Keeping up with competitors
Core considerations

When drawing up a collaboration agreement, it is vital that key elements of the agreement, such as IP and confidential information, are defined clearly. There are a number of aspects to consider, to protect both the collaboration and each party. These can include:

 

  • Background IP: This refers to the existing IP each party already has and should be kept separate so that there is no ambiguity between existing IP and IP created as part of the collaboration. Background IP must be defined clearly, particularly unregistered IP and know-how. This is a technical skill and best done with the advice of a lawyer.

 

  • Foreground IP: This refers to the new IP that is born out of the collaboration. Again, this should be carefully considered and defined. Clauses relating to Foreground IP should cover, for example, the disclosure of IP to the other party, ownership and licensing, as well as the responsibility of protection and registration. When negotiating how Foreground IP may be commercialised, the parties should consider whether there are any legal restrictions, such as competition law.

 

  • Confidentiality: Both the agreement itself and know-how / trade secrets should be considered. While the agreement itself is usually confidential, it should be agreed how each party’s confidential and technical information can be used. This should also cover consequences of termination of the agreement for any reason and the duration of obligations.

 

  • Practicalities & responsibilities: This should encompass all the basics, from how the parties will communicate, to the project schedule and change control. While this part of the agreement does not refer to the IP, it is still very important to define each element carefully.

 

  • Corporate structure: Sharing IP can be tricky, so the parties in collaboration should decide the corporate structure in the early stages. For example, if both parties have their own limited companies, they may wish to create a separate holding company to protect the IP and another trading company that will upfront the commercialisation of the project.

In summary, collaboration agreements are extensive documents that must cover all aspects of an arrangement in order to protect both parties.

While the benefits of a collaboration can be great, it can also be a difficult balancing act between achieving a lucrative partnership and ending up with an investment flop.

Get in touch to find out how our intellectual property team can help.

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