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The Perils of Joint IP Ownership

By Mitchell S. Feller

Intellectual property gives its owner certain exclusive rights and can be a significant part of a company’s assets. IP can be sold, licensed to third parties, enforced in court against an infringer, and even used as collateral to secure a loan. All of these rights can add value to the company. While it is legal for IP to be jointly owned by more than one entity, and this sometimes seems to be an easy and inexpensive solution to a collaboration, joint ownership of IP can create significant problems and should be avoided whenever possible.

A joint IP ownership scenario can arise by agreement or by inattention to ownership issues. For example, a patent can issue naming multiple inventors and, in the absence of an employment or other agreement addressing ownership, each named inventor is by default a joint owner of the entire patent. A group of computer programmers may sit down to make a new app and end up as co-authors who jointly own the copyright to the combined software. Two companies collaborating on a new project might agree to share costs equally and decide to split ownership the trademark and other IP rights that flow from the joint effort as a matter of fairness.

A patent gives its owner the exclusive right to exclude others from practicing the claimed invention. When a patent is jointly owned, this exclusivity is undermined.

• Each joint owner can independently sell, license, or otherwise exploit the patent without the approval of the other and without having to account to each other for their revenues. Without the cooperation of all owners, none can grant an exclusive license to a third party and so this valuable right is compromised. Even non-exclusive licenses can be impacted as prospective licensees might play one owner off the other to get the best deal.
• A jointly owned patent cannot be enforced unless all of the owners join in the lawsuit. If a co-owner refuses to participate, the lawsuit cannot proceed. The co-owner could even license the patent to an accused infringer instead of joining in the suit. This could be an even worse outcome for the party seeking to enforce the patent.
• Even before issuance, joint ownership can be problematic when the co-owners do not agree on prosecution strategy or who will pay the patent office and attorney fees.

A copyright gives its owner the right to prevent others from copying a protected work. Copyright ownership depends initially on the circumstances of the works’ creation. An employer owns the copyright where the work is created by employees in the course of their job. When a work is created by a contractor as a “work for hire” (and the work is one of the eight specific categories), the rights vest in the hiring party. When a special ownership rule does not apply and there is no other agreement in place, the work is owned by its author.

• If two or more authors work together to create a work and their contributions cannot be meaningfully separated, each is a co-owner of the copyright. Each is free to use or license the copyright and create or authorized derivative works without the consent of other co-owners.
• As with patent, an exclusive license cannot be granted unless all owners join in. Since many publishers want exclusive rights, joint ownership can make it difficult to find distributors of the work.
• Each co-owner is obligated to make an accounting to the other owners and share any profits they make. Performing this analysis can be complicated, particularly when derivative works are involved. One owner could also license the work under terms that generate no profit to account for, such as where a co-author of software offers it under an open source license.
• Unlike patents, a co-owner of a copyright can enforce it against a third party without the other owners having to participate. However, there is still a risk of a co-other offering a license to the accused infringer.

The function of a trademark is to identify the particular source of goods or services. Joint trademark ownership is less common than joint patent or copyright ownership. When it occurs, it compromises the trademark’s fundamental source-identifying nature.

• A trademark owner is required by law to monitor and control the quality of the trademarked goods or services provided by it and its licensees. Joint owners who are each in the market might apply different standards. Even if both owners trust the other to maintain quality, one company may lose interest and slack off or be acquired by a third party that has very different ideas about quality.
• If the owners do not agree and coordinate on quality, a court could rule that the trademark has been abandoned. Alternatively, the court could award full ownership to one party depending on what each party has done with the mark. Inconsistent use of the trademark by the co-owners and differing quality standards may also result in a court ruling that the mark is generic, freeing it to be used by anyone.
• As with patents and trademarks, an exclusive license cannot be granted unless all owners agree and in an enforcement situation, one owner could decide to license activities the other owner views as infringement.

Many of the problems that can result from jointly owned IP can be resolved by agreements put in place at the start of a project. The agreements should clearly establish who will own the IP, how rights are allocated among the parties, and the various scenarios that may occur, such as enforcement, and licensing or sale of IP rights. Gottlieb Rackman & Reisman can help ensure that these issues are properly addressed before you run into trouble. When disputes arise later on, it is often because the project has been successful and there is a lot of money at stake. Fixing things at that point can be much more difficult and expensive.

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Joint ownership of intellectual property rights.

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.

Trade Marks

What are the rules on joint ownership of intellectual property rights.

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.

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.

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.

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.

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Joint Applicants or Co-owners of IP

Sometimes you may wish to apply for (or to own) an intellectual property right (e.g., patent, registered trade mark or registered design) together with one or more people. This is perfectly possible but can cause complications if certain matters are not made clear at the outset. The purpose of this page is to outline some of the issues that can arise.

Relationship between co-owners

Firstly, you should be aware that the co-owners of the rights can agree amongst themselves any arrangement of ownership and division of rights and responsibilities that they wish. However, as with most agreements, it is of course better if these matters are set down in writing at the outset.

Often shared ownership arrangements arise out of joint research and development projects. It is not unusual for multiple parties to participate in and contribute their respective skills and know-how to those projects which result in the creation of patentable inventions and other intellectual property rights. In these cases, it is customary for the collaboration itself to be governed by a research and development agreement and to set out the terms on which the parties intend to share the intellectual property rights. However, this is not always the case. Our legal team can advise on this and assist with the drafting of any necessary agreements.

• Each co-owner is entitled to use the rights without needing the consent of the other co-owners, i.e., if you fall out with your co-owners they will be able to carry on using the rights without needing your agreement. This can be particularly dangerous in the question of a trade mark and may lead to invalidation of the trade mark registration. (It is also important to note that this provision does not guarantee that use of the rights does not infringe the rights of third parties).
• None of the co-owners may grant a licence, or assign or mortgage their share of the rights, without the consent of all the other co-owners. Therefore, if one co-owner wishes to use the rights by licensing a third party, it is important to reach agreement on this.
• Where one or more of the co-owners are individuals, their share of the rights will devolve to his or her personal representatives on their death, and not to the other co-owners.

Relationship with Mewburn Ellis

Where an application or right is to be owned by more than one person, we prefer to act for only one of the co-owners involved. This is to avoid possible conflict of interest problems if the co-owners should fall out in the future. In cases of this kind, we will require all the co-owners to sign an acknowledgement, agreeing that we are acting for only one party who will be our client. The acknowledgement also specifies that we need only write to our client and we will only take instructions from our client. This is to enable us to obtain clear instructions on an urgent basis when necessary, and to avoid us getting conflicting instructions from different co-owners. Of course, the co-owners may include arrangements for taking decisions and sharing costs between themselves in their co-ownership agreement. Please talk to Mewburn Ellis LLP if you need more information on this topic.

Download: Mewburn Ellis LLP Client Joint Applicants or Co-Owners of IP Form

This information is simplified and must not be taken as definitive statement of the law or practice.

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Intellectual Property: Joint Ownership | Practical Law

Intellectual Property: Joint Ownership

Practical law practice note 9-583-4685  (approx. 22 pages).

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Contracts and IP ownership

For most companies — especially small businesses, startups, and partnerships — intellectual property (IP) is either the crown jewel of the business or a key asset. For in-house counsel, this means that extra care is needed when preparing any contract that touches on IP ownership. While it seems scary, the basic concepts of IP ownership are relatively straightforward and there is much in-house counsel can do without always resorting to the use of outside counsel — if that’s even an option.

There are, however, certainly times when experienced IP counsel is helpful and necessary. With Practical Law, however, you can learn the basics of IP and IP ownership and have access to a huge library of contract templates, clauses, checklists, practice notes, drafting notes, and toolkits. And, all for far less than the cost of outsourcing all of your intellectual property contracts issues to outside counsel.

What is intellectual property and IP ownership?

There are four types of IP that in-house counsel are concerned about when drafting or reviewing agreements:

• Trade secrets

When preparing or reviewing a contract involving IP ownership, the parties are generally trying to set out the key issues — namely, “who owns what” (ownership) and “how can the IP be used” (license). More about these concepts is laid out below, but without a contract in place stating otherwise, here are the general rules for IP ownership.

Copyrights, or original works of art, are owned by the author who created the work; if multiple authors are involved, they are joint owners with an indivisible interest in the work. Patents — also known as inventions — are owned by the inventor. Trademarks are the marks used in commerce and are owned by the person or business using them to identify their goods or services. Trade secrets, also known as confidential information, are owned by the creator — mostly businesses through their employees. With trade secrets, care must be taken to keep them confidential or they lose their status as trade secrets.

IP contracts establish ownership

Of course, it’s pretty rare that a lawyer will rely on things just working themselves out based on the common law. Instead  and rightfully so, they want to lay out IP ownership in a written agreement that spells out the rights and obligations of each party. This is where the hundreds of IP contract templates in Practical Law can really cut your time, effort, and cost way down. To start, you need to get familiar with the three types of intellectual property agreements: the creation of IP, the licensing of IP, and the purchase/assignment of IP.

How to create intellectual property

You can create intellectual property in a number of ways. For the purposes of most businesses, IP is created by its employees or by third parties, such as contractors hired to create IP based on specifications and direction provided by the business. While businesses own IP created by their employees — if it is part of their job to create such IP — it is not wise to leave ownership to chance.

The typical solution is an invention assignment agreement signed by the employee when they first join the company. Such an agreement covers a range of IP ownership issues, from confidentiality of company trade secrets to the assignment of any intellectual property created on the job or using company resources to the company. These agreements also require employees to disclose any inventions they claim to have invented prior to joining the company so there is no dispute down the road.

When it comes to contractors, their agreements usually contain a “work-for-hire” provision which states that any work product they turn out for the company under the contract belongs to the company. The only exceptions involve IP the contractor brings to the relationship. It continues to belong to the contractor but, if necessary, the contractor provides a license for the company to use that IP to make the work product function properly. These agreements also contain confidentiality and non-disclosure provisions to ensure that neither party reveals the confidential information of the other party.

See the Practical Law practice note  Intellectual Property – Employees and Independent Contractors

Lastly, companies sometimes partner and enter into a joint development agreement to create IP that neither party could easily create on their own. Each party contributes something to the development and then the ownership and use rights are spelled out in the terms of the agreement.

How to license the IP

IP ownership also comes up in the context of licensing the IP. Many companies’ entire business comprises licensing software or other IP they have developed. To do this successfully, they must enter into software/IP licensing agreements with customers. These agreements set out, among other things:

• Ownership of the IP and any modifications or derivatives
• Who may use the licensed IP, in what manner, and is there exclusivity?
• The ability to sublicense
• Where the IP may be used
• The period of time the licensee may use the IP
• Warranties about the software
• Indemnities, primarily from the licensor against IP infringement
• Obligations not to reverse engineer the software or allow unauthorized access
• Permitted uses and prohibited uses of the IP
• How the agreement ends and what happens to the licensee’s ability to use the IP after termination

While software agreements are the obvious IP licensing contracts, intellectual property licensing arises in franchise agreements; entertainment such as movies, music, and art; NFT; and many other contexts. That is, any type of IP is subject to a licensing agreement.

How to purchase or assign intellectual property

Lastly, IP ownership can be purchased or assigned — that is, the inventor or owner of the IP can transfer it to a new owner. Note that the assignment of IP is different than licensing IP. Under an assignment, ownership and all rights are transferred. With a license , there is no transfer of ownership and only limited rights to use the IP are given.

Some common situations involving buying IP include mergers and acquisitions of the company that owns the IP or just a straightforward purchase of the IP asset alone. For example, owners can sell copyrights and trademarks, including web addresses — many so-called patent trolls buy patents out of the bankruptcy estate of a failed business. Here are three things to keep in mind when buying IP:

•   Define the IP properly. What, exactly, are you buying or selling? Words will matter here.
• Representations and warranties. Drafting properly is important, especially representations around ownership of the IP being sold, warranties around non-infringement, and an indemnity if something goes wrong.
• Residual use. Does the seller have any rights to continue to use the IP? If so, what is the scope? What is the price?

Assignment of IP typically takes place when a party is contributing their IP to a joint venture or partnership , or when the founder of a technology business transfers their invention to the new business, which is generally a requirement to attract new investors. Intellectual property may be transferred to satisfy debts or a judgment, or when a subsidiary or division is “spun out” of a parent company and provided with certain IP assets to start their separate business. When assigning IP, consider these three key points in addition to those above:

• Broad assignment rights. Define what is being assigned and ensure you are getting what you think you are getting.
• Power of attorney. Generally, there will be an obligation on the part of the assignor to cooperate in taking any steps necessary to perfect the assigned rights. A power of attorney gives the assignee the ability to perfect those rights even without the assignor’s assistance.
• Dissolution . If the company folds or the joint venture fails, what happens to the IP that was contributed? You need to think this through at the beginning as it is too late to think about it when the problem hits.

Given the importance of IP to businesses — especially small business and partnerships — in-house counsel should be well versed in the contracts that govern its ownership, assignment, and licensing. It may seem daunting at first, but it is a skill you can hone relatively quickly, especially with a resource like Practical Law to back you up.

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Your rights as a joint owner of intellectual property

The joint ownership of intellectual property can arise in 2 different ways:

• An agreement may provide that intellectual property will be owned jointly by the parties, regardless of whether they were joint authors, joint inventors or joint creators.
• The parties may contribute jointly to the creation of the intellectual property and so are joint authors, joint inventors or joint creators.

What should an agreement address if there is to be joint ownership?

Sometimes, parties have an agreement, and agree on joint ownership of the intellectual property, but do not regulate their joint ownership relationship any further.

If joint ownership is to be agreed, it is critical that the agreement also address the following 3 questions:

• only with, or without the need for, the other joint owner's consent?
• only with the obligation, or without the obligation, to pay royalties (or other fees)?
• only with the obligation, or without the obligation, to share the royalties (or other fees) received from the licensee?
• Can a joint owner assign its share of the jointly owned intellectual property to another person only with, or without the need for, the other joint owner's consent?

If an agreement does not address these questions, the joint owners will be regulated by the different and sometimes inconsistent laws that apply in relation to joint ownership.

It is therefore always prudent to specifically address the 3 questions above in your agreement, so that the jointly owned intellectual property is regulated in the manner that the joint owners agree, instead of the sometimes unpredictable and disadvantageous way that the law might regulate the jointly owned intellectual property.

Ownership proportion

The other matter that an agreement should specifically address is the ownership proportions held by the joint owners.

If the parties do not specify a joint ownership proportion, it will be presumed that they are equal joint owners.

However, joint owners do not always seek to be equal joint owners. Sometimes, one may make a larger contribution than the other (in money, resources, or an innovative contribution), which may justify an unequal ownership proportion.

In that case, it will be important to specify what the joint ownership proportion will be, or how it is to be determined, to avoid it being presumed to be equal.

Unless the joint owners of a patent agree otherwise, the law provides they have equal shares in the patent and can exploit it for their own benefit without accounting to each other. However, 1 owner cannot grant a licence under the patent, or assign an interest in it, without the consent of the other owner.

Now let's consider the case of 2 joint owners who collaborated on a project and expected their relationship, because it was based on joint ownership, to be joint, mutual, and with equal benefits.

They either:

• had no agreement governing their joint ownership rights, or
• had an agreement, but were silent on their respective joint ownership rights.

That being the case, the law will step in to provide a default position on 3 critical questions:

One joint owner is a large company ('L') with manufacturing, marketing and selling capability.

The other joint owner has a small family company ('S') without that manufacturing, marketing and selling capability.

They can both exploit the patent and retain the profits, without accounting to the other for those profits.

L has the capability to do so, but S does not.

S asks L for permission for S to grant a licence to another person, but because that would result in L having a competitor to contend with, L declines.

S and L expected their joint ownership relationship to be one of joint and mutual equal benefits.

But practically, L has all the benefits of ownership, and S has none.

The lesson is that it is not desirable to be silent on these issues of exploitation, assignment and licensing, but rather, to specifically address them, and for a joint ownership agreement to regulate in an agreed manner the respective rights of the joint owners in relation to these 3 critical questions.

Now let's consider the case of 2 software engineers, or other authors who jointly write a copyright work, and therefore jointly own the copyright in that work.

Again, they expect their relationship, because it was based on joint ownership, to be joint, mutual, and with equal benefits.

As before, they either:

• had an agreement, but it was silent on their respective joint ownership rights.

The result now is that neither joint owner can realise any economic benefits whatsoever, without them doing so together.

Sometimes this might operate fairly, ensuring that the joint owners benefit together.

But it could just as likely operate unfairly, with an uncooperative joint owner placing roadblocks that prevent the joint owners realising economic benefits from their joint copyright.

Trade secrets, know-how and confidential information are not 'property' so it is not entirely accurate to ascribe to them any joint ownership characteristic, but we nevertheless need to do so.

It is not unusual for a collaboration agreement to broadly describe 'intellectual property' in a way that includes trade secrets, know-how and confidential information, and for a provision to be included in the collaboration agreement stating that all intellectual property will be jointly owned.

Suppose that the only outputs of the collaboration are trade secrets, know-how and confidential information.

The collaborators having agreed that all 'intellectual property', including trade secrets, know-how and confidential information were to be jointly owned, what meaning is to be given to those terms?

The relationship between the collaborators could be described as one of confidence - dealing as it were with confidential information.

The use or disclosure of the confidential information by one collaborator, without the sanction of the other, could well destroy the confidential character of the confidential information.

A court would therefore be likely to step in, to prevent the confidential character of the information being destroyed if the other collaborator had not consented to its use.

That being the case, these 3 questions might well be answered by a court in the following way:

These questions are answered in a similar way to those answered in relation to copyright.

The result again is that neither 'joint owner' is able to realise any economic benefits whatsoever, without acting together.

Sometimes this situation might operate fairly, ensuring that the 'joint owners' benefit together.

But it could just as likely operate unfairly, with an uncooperative 'joint owner' impeding the joint owners realising economic benefits from their joint copyright.

The lesson, again, is that it is not desirable to be silent on these issues of exploitation, assignment and licensing, but rather, to specifically address them, and for a joint ownership agreement to regulate in an agreed manner the respective rights of the joint owners in relation to these 3 critical questions.

What are the implications of joint ownership of trademarks, designs, integrated circuits, or plant varieties?

Each of these categories of intellectual property is governed by its own legislation.

However, none of the 4 relevant pieces of legislation deals with joint ownership.

If there was joint ownership of any of these types of intellectual property, it could be the outcome of the joint owners being partners, or again, standing in relation to each other in a position of trust and confidence, as is the case with confidential information.

That being so, where the joint owners are silent about their respective rights and obligations as joint owners of intellectual property, the position may be not unlike that which applies in relation to copyright, and confidential information, that is:

The result again is that neither 'joint owner' can realise any economic benefits whatsoever, without doing so together.

• Last reviewed: 26 Sep 2020
• Last updated: 18 Sep 2023

Jointly Owned Intellectual Property: Everything to Know

Jointly owned intellectual property is intellectual property, or IP, that is owned by two or more people at once. 3 min read updated on February 01, 2023

Jointly Owned Intellectual Property Overview

Jointly owned intellectual property is intellectual property, or IP, that is owned by two or more people at once. This can occur when two or more people invent, create, or author a patentable property together or when a compromise on ownership is reached in a contract. This most often happens when the individual’s contribution to a collaborative work cannot be easily discerned from the other's.

Scenarios where joint ownership can occur include joint development arrangements, joint ventures , and subcontracting situations. Only what is referred to as “active contribution” to a work will qualify the individual for a right to co-ownership; what is referred to as “ordinary assistance” or the sharing of information and ideas does not. Essentially, the contributions of the individuals should be indivisible from the whole.

Joint ownership can occur with all IP forms: copyright, patents, trade secrets, and trademarks. Furthermore, with the increase in collaborative research in recent years, the prevalence of joint ownership has also increased. It is therefore important to be up to speed on every aspect joint ownership, especially if it is likely that your work will result in such an outcome.

Jointly Owned Copyrights

Joint owners of copyrights have the right to copy, distribute, create derivate works, and wield other exclusive rights where their work is concerned, and they may do so without consulting with their fellow copyright owners. They do have to share any profits they receive from their copyright, however, and they must receive unanimous consent from the other owners to license the copyright. On the other hand, unanimous consent is not required for a copyright infringement suit to move forward.

It is also important to note that copyright exists as soon as a work is created, whereas patent rights are granted after a patent application is filed. Once copyright is in effect, the ownership of the copyright can be transferred freely as if it were any piece of personal property, without the consent of the co-owners.

Jointly Owned Patents

When a patent is jointly owned, each owner may use, make, offer to sell, sell, or import the asset described in the patent without needing the consent of the other owners, so long as the patent rights of the other owners are not infringed upon with a separate patent. Each patent owner may also profit from the patent without having to share such profits with the co-owners. However, exclusively licensing the patent to a third party will generally require the consent of every co-owner, as will such consent be needed for any patent enforcement.

Jointly Owned Trade Secrets

Laws regarding the joint ownership of trade secrets are not as well defined as they are for patents and copyrights, as this is not as common. It is perhaps wise to assume though that profits derived from trade secrets will have to be shared amongst the owners and unanimous owner consent will be required to license the trade secret, although case law and statutes have little to say on this.

Jointly Owned Trademarks

Similarly, although jointly owning a trademark is possible, it is uncommon, since the basic purpose of the trademark is to designate ownership to a single person or entity. However, if this does occur, joint trademark owners will in most cases have to share any profits derived from that trademark, and consent will be required to exclusively license the trademark. A more common scenario than this is a business entity being jointly owned and the entity owning the trademark.

Other Joint IP Ownership Issues

Some other issues involving joint ownership to consider include:

• Joint owners can modify a number of details involving joint IP ownership by addressing the details in a contract, as long as such adjusted details do not violate antitrust laws.
• Joint ownership rules , as stated above, do not apply in the same way in many foreign nations. For instance, in the U.K. and Canada, joint patent owners cannot license the patent right to third parties without unanimous owner consent.
• Joint ownership can often lead to many difficult legal situations, so emerging companies often try to avoid it or at least modify the default rules in a joint ownership contract.

If you need help understanding how to deal with jointly owned intellectual property, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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Joint ownership of intellectual property rights

Practical law uk practice note 5-521-2645  (approx. 31 pages).

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IP Assignment and Licensing

IP rights have essentially transformed intangibles (knowledge, creativity) into valuable assets that you can put to strategic use in your business. You can do this by directly integrating the IP in the production or marketing of your products and services, thereby strengthening their competitiveness. With IP assignement and IP licensing, IP owners can also use your IP rights to create additional revenue streams by selling them out, giving others a permission to use them, and establishing joint ventures or other collaboration agreements with others who have complementary assets.

  Expert tip: Assignment, license and franchising agreements are flexible documents that can be adapted to the needs of the parties. Nevertheless, most countries establish specific requirements for these agreements, e.g. written form, registration with a national IP office or other authority, etc. For more information, consult your IP office .

IP rights assignment

You can sell your IP asset to another person or legal entity.

When all the exclusive rights to a patented invention, registered trademark, design or copyrighted work are transferred by the owner to another person or legal entity, it is said that an assignment of such rights has taken place.

Assignment is the sale of an IP asset. It means that you transfer ownership of an IP asset to another person or legal entity.

IP for Business Guides

Learn more about the commercialization of patents, trademarks, industrial designs, copyright.

Read IP for Business Guides

IP licensing

You can authorize someone else to use your IP, while maintaining your ownership, by granting a license in exchange for something of value, such as a monetary lump sum, recurrent payments (royalties), or a combination of these.

Licensing provides you with the valuable opportunity to expand into new markets, add revenue streams through royalties, develop partnerships etc.

If you own a patent, know-how, or other IP assets, but cannot or do not want to be involved in all the commercialization activities (e.g. technology development, manufacturing, market expansion, etc.) you can benefit from the licensing of your IP assets by relying on the capacity, know-how, and management expertise of your partner.

  Expert tip: Licensing can generally be sole, exclusive or non-exclusive, depending on whether the IP owner retains some rights, or on whether the IP rights can be licensed to one or multiple parties.

Technology licensing agreements

Trademark licensing agreements, copyright licensing agreements, franchising agreements, merchande licensing, joint venture agreements, find out more.

• Learn more about Technology Transfer .

Education Center

Rights of co-owners to license patent rights.

It is sometimes tempting when entering into a joint research agreement to agree that both parties will jointly own any patent rights arising from the collaboration. However, unless the rights of each party are clearly set out in the agreement, this can lead to complications and may be dangerous.

United States

In the United States, 35 USC 262 provides that in the absence of an agreement to the contrary, each joint owner of a patent may make, use and sell the patented invention without the permission of or the need to account to the other joint owners.1 Case law has extended this provision so that each co-owner may also license the invention without recourse to the others, thereby effectively precluding the grant of an exclusive license in cases of joint ownership unless all the joint owners agree not to grant any further licenses or to work the invention themselves.2 Similarly, “one co-owner has the right to impede the other co-owner’s ability to sue infringers by refusing to voluntarily join in such a suit.”3 Indeed, refusal to join in suit against an infringer can result in the de facto grant of a license even without positive action.4

In this context, it should be noted that the co-inventor of a single claim has in the absence of having assigned his or her rights to someone else been held to be the co-owner of the entire patent.5

It should be noted that in states such as California and Texas where community property laws apply, there may be joint ownership of an invention made during the marriage and any patent arising from it even if only one spouse is in fact an inventor.6 Where an inventor may be subject to such a law, it is therefore a good idea to make sure that the non-inventing spouse agrees that the patent should not be regarded as community property or agrees to any transfer of rights that may occur.

Co-ownership applies to the whole patent so that it is not possible for one to divide ownership between different claims.7  Consequently if some subject matter of a patent is invented within the terms of a collaboration agreement but some is invented by only one party, in the absence of an agreement to the contrary, the entire patent will be jointly owned, even though the subject matter of some of the claims could have formed the subject matter of a separate patent to which one party was entitled to exclusive ownership.8

Outside the United States

Few, if any, countries follow the practice in the United States of allowing joint owners to license their patents without the consent or need to split income from a license with the other co-owner of the patent being licensed.

Many countries, such as Australia, China, France, India, Japan, Korea, Netherlands, Spain and the United Kingdom have specific provisions in their patent laws dealing with this issue. In others such as Canada and Germany, the issue is addressed as part of the general law.

The most common position in other countries having specific provisions in their patent laws on licensing by co-owners is that this is permitted only with the consent of the co-owner.

United Kingdom, Australia, India

In all three of these countries, the law derives from the same common law tradition as exists in Canada and is discussed below, but has been subject to legislative codification which began with Section 37 of the UK Patents and Designs Act 1907 which simply provided that where a patent was granted to two or more persons, “each of such persons shall be entitled to use the invention for his own profit without accounting to the others, but shall not be entitled to grant a licence without their consent,”.

In the United Kingdom , the rights of co-owners are now governed by Sections 36, 37 and 66 of the Patents Act 1977. Section 36(3) provides that in the absence of an agreement to the contrary, where two or more persons are proprietors of a patent one of them shall not without the consent of the other or others – (a) amend the specification of the patent or apply for such an amendment to be allowed or for the patent to be revoked, or (b) grant a licence under the patent or assign or mortgage a share in the patent or in Scotland cause or permit security to be granted over it.

Section 37 permits the comptroller to order the grant of a license upon request by any proprietor of a patent if he sees fit to do so. This provision does not, however, seem to have been used.

Section 66(2) provides:

One of two or more joint proprietors of a patent may without the concurrence of the others bring proceedings in respect of an act alleged to infringe the patent, but shall not do so unless the others are made parties to the proceedings; but any of the others made a defendant or defender shall not be liable for any costs or expenses unless he enters an appearance and takes part in the proceedings.

In Australia , Section 16 of the Patents Act provides

(1) Subject to any agreement to the contrary, where there are 2 or more patentees: (a) each of them is entitled to an equal undivided share in the patent; and (b) each of them is entitled to exercise the exclusive rights given by the patent for his or her own benefit without accounting to the others; and (c) none of them can grant a licence under the patent, or assign an interest in it, without the consent of the others. Section 17 permits co-owners to seek a direction from the Controller on a variety of matters, including possible grant of a license, which he may decide as he sees fit.

A consequence of co-owners having an undivided share of the patent is that enforcement requires agreement by all of them.

In India , when a patent is owned jointly by more than one owner, each co-owner has the right to make, use, offer for sale, sell or import anything that would otherwise be a patent infringement. However, joint owners may not, unless an appropriate direction has been given by the controller, grant any license under the patent or assign its share in the patent without the consent of the other co-owner or co-owners.9 In cases where one co-owner wishes to grant a license or assign its share in the patent but has not been able to obtain consent from the other co-owner or co-owners, it may request the Controller to issue a direction to the other party or parties to do so. Before issuing any such direction, the Controller must give the other parties the opportunity of a hearing to explain why such a direction should not be made.10

Essentially similar provisions are found in Article 66(2) of the Dutch Patent Act 11 and Article 72(3) of the Spanish Patent Law 12.

Japan and Korea

Article 73 (1), (2) and (3) of the Japanese Patent Law reads as follows:

• Where a patent right is jointly owned, no joint owner may assign or establish a right of pledge on the said joint owner’s own share without the consent of all the other joint owners.
• Where a patent right is jointly owned, unless otherwise agreed upon by contract, each of the joint owners of the patent right may work the patented invention without the consent of the other joint owners.
• Where a patent right is jointly owned, no joint owner may grant an exclusive license or non-exclusive license with regard to the patent right to any third party without the consent of all the other joint owners.

Article 99(2), (3) and (4) of the Korean law, which was in part modeled on the Japanese law, contains the same language. It should be noted that the provision in the first of these sub-clauses in each country goes beyond what is normal in many countries in limiting the co-owners right to dispose of his share without consent.

France and China differ from the above group of countries in that licensing by one co-owner is permitted, even if there is no agreement to that effect, but the proceeds of the license must be shared.

In China Article 15 of the Patent Law provides:

Where the co-owners of a patent application or patent have concluded an agreement on exercising of the right, the agreement shall apply. In the absence of such agreement, any co-owner may independently exploit the patent or license another party to exploit the patent through non-exclusive license; any fee for the exploitation obtained from licensing others to exploit the patent shall be distributed among the co-owners. Except for the circumstances as provided in the preceding paragraph, a jointly owned patent application or patent shall be exercised with the consent of all co-owners.

Article L613-29 of the Intellectual Property Code sets out a comprehensive scheme for addressing rights of co-owners of a patent if they have not made their own agreement, including provisions that joint ownership of a patent application or of a patent shall be governed by the following provisions:

a) although co-owners may use the invention themselves, such use may be subject to making some recompense to other co-owners. b) as long as the other co-owners are notified, each co-owner may enforce the patent by itself; c) Each joint owner may grant to a third party a non-exclusive license for his own benefit subject to making equitable compensation to the other joint owners who do not personally work the invention or who have not granted a license. Failing amicable agreement, such compensation shall be laid down by the First Instance Court. It is, however, necessary to provide advance notification of the intention to grant a license to the other co-owners accompanied by an offer for transfer of the share at a specified price. In the case of dispute, the District Court will fix the price d) although each co-owner is entitled to assign its share of the patent, this is subject to a right of preemption by the other co-owners

As noted above, neither Germany nor Canada has any specific legislation relating to rights of co-owners in patents.

Section 743(2) of the German Civil Code provides that when dealing with co-ownership of things in general, Each part owner is authorized to use the joint object to the extent that joint use by other part owners is not impaired. Since licensing of a patent by one co-owner can reduce the benefit of the patent to other co-owners, grant of such a license can have the effect of impairing the rights of other co-owners and so requires their consent. Section 745(2) however permits a court to intervene if refusal to grant such consent unreasonably affects the rights of all co-owners.

In Canada, the question is governed by common law. In Forget v. Specialty Tools of Canada Inc, Wood JA in the British Columbia Court of Appeal13 looked back to pre-1907 English case law to hold that any partial disposition of the rights of one co-owner, which included the granting of a license, had the effect of diluting the rights of the other co-owners because a greater number of persons would now be entitled to share in the benefits of the exclusive rights granted by the patent. Consequently consent of all other co-owners was needed before such dilution should be permitted.

As can be seen from the above, there is still substantial variety in the ways in which countries treat the rights of co-owners when they have not agreed to these among themselves in advance and detailed thinking about what is desired is important before entering into a joint ownership agreement.

This article first appeared in  Offshore Investment , July/August 2014.

1 It seems that an “agreement to the contrary” need not be in writing and that this provision does not preempt state law claims for unjust enrichment in appropriate circumstances. Massachusetts Eye and Ear Infirmary v. QLT Phototherapeutics Inc. 75 USPQ2d 1225 *1st Cir. 2005). Another example of an agreement to the contrary is found in Wisconsin Alumni Research Foundation v. Xenon Pharma Inc. , 93 USPQ2d 1361 (7th Cir 2010).

2 See for example Willingham v. Star Cutter Co. , 194 USPQ 249 (6th Cir 1977).

3 Schering Corp v. Roussel-UCLAF SA , 104 F3d 341, 41 USPQ2d 1359 (Fed Cir 1997). See also Israel Bioengineering Project v. Amgen Inc. , 81 USPQ2d 1558 (Fed. Cir. 2007).

4 This is what occurred in the recent case of STC.UNM v. Intel Corporation where a complex background had led to a finding that the patent in question was jointly owned by two co-owners and one of them did not wish to participate in an infringement suit. The party pursuing the suit sought to use Rule 19 of the Federal Rules of Civil Procedure to compel participation by its reluctant co-proprietor. Rule 19 provides that certain parties having an interest in a law suit must be parties to the suit and gives the court power to join them as a defendant or an involuntary plaintiff. However in its decision of June 6, 2014 (case 2013-1241), the majority of the Federal Circuit held that Rule 19 was a procedural rule and that “Rules of procedure, such as that in Rule 19(a), must give way to substantive patent rights.” The Court went on to hold:

To remove any doubt, this court holds that the right of a patent co-owner to impede an infringement suit brought by another co-owner is a substantive right

that trumps the procedural rule for involuntary joinder under Rule 19(a).

5 Ethicon Inc v. United States Surgical Corp , 45 USPQ2d 1545 (Fed Cir. 1998). See, however, the strongly worded dissent to this view by Judge Newman who took the view that the law change on joint inventorship in 1984 had rendered older cases moot.

6  Enovsys LLC v. Nextel Communs. Inc. , 614 F.3d 1333 (Fed. Cir. 2010)., although in that case, the effect of the community property right was negated by the terms of the couple’s divorce.

7  Pope Mfg Co. v. Gormully & Jeffrey Mfg. Co. , 144 US 248 (1892).

8 Lucent Technologies Inc. v. Gateway Inc. , 88 USPQ2d 1481 (Fed. Cir. 2008).

9 Patents Act Section 50.

10 Patents Act Section 51.

11 Which also specifically provides that a single co-owner can enforce the patent.

12 This section also specifically provides that a judge may authorize a single co-owner to grant a license for reasons of equity in particular circumstances. Article 72(2) permits a single co-owner to enforce the patent without consent of the other co-owners.

13 62 CPR(3d) 537 (1995)