Many tech start-ups license in their seed technology from academic or research institutions. They also often collaborate with others to develop new technology, under joint development agreements that can dictate newly developed inventions will be jointly owned by the parties.
Regardless of the path or circumstances, when the interests of joint owners or licensor/licensee are aligned, it’s easy sailing. But when the parties’ interests diverge, you want to be sure you know where you stand legally.
The language of a properly drafted license or development agreement defines each party’s rights and responsibilities under the contract. One area to pay particular attention to is who will take the lead in prosecuting the patent rights and what rights the other party has to participate in the process.
As a licensee or joint owner, when you take the lead in patent prosecution, your patent attorney may have certain obligations to the other party. For example, a power of attorney from the other party may be required. This can establish a fiduciary duty to act in the best interest of the other party. And, in some circumstances, both parties can be clients of the patent attorney. Despite both parties executing conflicts of interest waivers, the joint representation entails all of the ethical obligations an attorney has to each client. A falling out of the parties can result in the patent attorney being unable to represent either party in the ongoing patent work and in the related dispute.
Managing the parties’ contractual relationship at the outset, for example by avoiding joint ownership obligations of newly developed IP, can be helpful, but won’t necessarily address all contingencies. What is important is to have a clear understanding with your patent attorney as to her role from the very start, so that foreseeable problems can be avoided.
This post on Start-up Legal Issues was authored by Chris Stamos.