IP management scenarios - Scenario five
The parties need to consider whether the research partner will be given access to, or rights in, the business partner’s background IP.
There are a number of ways this can be arranged, with varying degrees of complexity. The IP Toolkit Model Contract allows background IP to be used on agreed terms without affecting the ownership of the IP (clause 13, part 1).
In the above scenario, the business partner retains ownership of the background IP and the research partner would be given a non-exclusive licence to use that IP for collaboration on the project and any other purposes the parties agree to (clause 13, part 3). The Mini IP Toolkit Model Contract takes a similar approach (see clause 14, part 2).
The parties need to decide who is best placed to own, protect and commercialise the project IP.
The IP Toolkit Model Contract provides three options for the ownership of project IP. The IP will be owned:
- by the researcher
- by the business partner or
- jointly by both parties (clause 14 of part 3).
Clause 14 of part 1 of this contract sets out a default arrangement where the owner of the project IP grants the other party a ‘perpetual, irrevocable, world-wide, non-exclusive, royalty free and fee free licence’ to use this IP for the project.
The parties can agree to a different arrangement if they choose and specify this in the contract. Clauses 16.7 – 16.9 of part 3 mention the protection of jointly owned project IP. If this option is chosen, it is recommended that the parties seek legal advice to determine issues such as how the IP will be managed and the percentage share of each party.
The Mini IP Toolkit Model Contract sets out a different approach. It provides for a default position where the business partner, or ‘sponsor’, owns the project IP and the research partner is given a licence to use it, unless a different arrangement is agreed (see clause 13 of part 1).
Both contracts provide a range of commercialisation options where the project IP is jointly owned by both parties or owned by only one of the parties. See clause 17, part 3 of the IP Toolkit Model Contract or clause 16 of part 2 of the Mini IP Toolkit Model Contract.
While new technology developed during the project may be protected by a registered right such as a design or patent, there may be additional IP generated such as plans, reports, photos, software, test results, websites and databases. The IP Toolkit Model Term Sheet encourages parties to identify these and specify who will own them and how each party may use them (pages 6 to 7). These deliverables can be listed separately at clause 14, part 3 of the IP Toolkit Model Contract or at clause 12, part 2 of the Mini IP Toolkit Model Contract.
Third party IP
The IP Toolkit Model Term Sheet encourages parties to identify any relevant third party IP and consider matters that affect how the IP can be used (pages 6 to 7).
Both IP Toolkit Model Contracts highlight a number of issues to be considered if third party IP will be used, including the potential risks, costs and licensing requirements. See clause 13 of part 1 of the IP Toolkit Model Contract or clause 12 of part 1 of the Mini IP Toolkit Model Contract for details.
If third party IP is needed for the project, the owner of that IP will need to agree to its use. Any licensing agreement to use third party IP should clearly outline the circumstances and timeframes for use, including any proposed sublicensing amongst the project partners.