IP management scenarios - Scenario nine
The parties need to decide how their respective background IP will be shared with each other and used in the project. This is a potentially complex situation in which legal advice should be considered.
The IP Toolkit Model Term Sheet provides an opportunity to identify and list all relevant background IP that each party is contributing (pages 4 to 5). This also provides an opportunity to consider how the background IP is to be protected and any conditions around its use.
Neither contract specifically covers the situation where both parties bring background IP, but an appropriate amendment to the contract could be made to accommodate this, for example by providing for the mutual exchange of licences regarding the background IP.
The contracts also require the use of an IP Register and a template is provided at Attachment A to each contract. The default position in each contract is that the responsibility to maintain the IP Register sits with the research partner, but a different arrangement can be agreed and specified in the contract.
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.