Intellectual property (IP) ownership is a crucial aspect of innovation and creative work, making sure that creators and inventors keep control over their ideas. BUT, joint intellectual property ownership—where two or more parties share the rights to a piece of IP (e.g. a patent)—can create significant challenges and problems. While it may seem like a fair and collaborative arrangement at the start of a creative relationship, especially whilst that relationship is good, this setup can quickly become a source of conflict and legal difficulties. Here are some of the dangers of joint IP ownership:
1. Conflicting Interests and Disagreements
When multiple parties share IP rights, differing priorities, goals, and expectations are bound to arise over time. Disagreements can occur over how the IP is used, licensed, or even exploited commercially. One party may want to sell the IP, while the other prefers to hold onto it or take a different approach to commercialization. This lack of alignment can lead to legal disputes, stalling progress and wasting valuable resources.
2. Difficulty in Making Decisions
Joint ownership means that there has to be consensus for major decisions, such as selling, licensing, or modifying the IP. This can lead to paralysis if one party refuses to agree, delaying opportunities to leverage the IP. With each co-owner having equal rights, one party’s veto can block possible lucrative deals, causing frustration and resentment.
3. Unclear Financial and Legal Responsibilities
Joint ownership complicates the allocation of profits and losses. Without a clear agreement, it becomes difficult to define how income from the IP is shared and how the costs of maintenance or legal defense are divided. One party may end up bearing more of the financial burden, while the other enjoys the rewards.
4. Increased Risk of Infringement
When multiple parties share ownership, tracking the use of the IP becomes more challenging. Each co-owner has the right to license or use the IP, which can lead to unintended infringements or violations of terms with third parties. Without stringent controls, one co-owner’s actions might expose the other parties to legal liability.
5. Exit Difficulties
When it’s time to sell, assign, or transfer ownership of the IP, joint ownership can make the process complicated. Without the consent of all owners, it’s impossible to sell or transfer the asset. If one co-owner wants out, it can lead to protracted negotiations or even legal battles, especially if no buyout terms were clearly established at the outset.
In conclusion, while joint IP ownership can be a way to share creative or inventive efforts, it often creates more problems than it solves. If, after much thought and negotiation, joint IP ownership is still considered to be the best way forward (rather than, for example, setting up a company to hold the IP rights), clear, upfront agreements are essential to managing the risks and ensuring that all parties understand their rights, responsibilities, and obligations. For many, separate ownership or more defined collaboration structures might be the better path forward to avoid these dangers of joint IP ownership.
Need Help?
Strachan IP is a full service IP firm, with many years’ experience helping inventors and innovative SMEs to identify, capture, preserve and protect the valuable IP they create. If you have any questions at all about your IP, please book a free initial consultation by emailing vicki.strachan@strachanip.co.uk, or visit our website at https://strachanip.co.uk/contact/, or use our Calendly link: https://calendly.com/strachan-ip-a-fresh-view-of-intellectual-property/30min.
