Co-ownership of IP involves something like a partnership or joint venture. Several entities or individuals come together to manage a business asset, in this case IP. There is much for them to manage and agree on, including:
- how to protect the asset, including how much to spend, what decisions should be made on scope, territory, etc
- how to deal with regulatory bodies, such as patent offices
- how to deal with competitors who challenge the asset in some way, eg through interference actions or allegations of infringement of third party rights
- how to assert their legal rights in the asset, eg by suing infringers
- how to commercialise the asset, including who takes the lead in commercialisation
- how to share the financial benefits that come from owning and using the asset
If their interests are not aligned, partners can become frustrated and disillusioned. They look for an exit, which is why the last third of joint venture agreements typically sets out a detailed mechanism for how the parties can extricate themselves from their relationship.
Co-owners of IP would be well-advised to enter into a co-ownership agreement that addresses the issues mentioned above. But often they don’t, perhaps because they agree to become co-owners at a time when it is not yet known whether the IP has any value. For example, co-ownership often features in collaborative R&D agreements, as a solution to who will own the IP in the future results of the collaboration.
Where co-owners don’t have a detailed co-ownership agreement, they may have to fall back on the default rules for co-ownership of IP that apply to their relationship. As this blog has previously commented, the rules vary greatly between jurisdictions. If you have a portfolio of co-owned IP across different jurisdictions, should the rights and obligations of the co-owners be looked at on a jurisdiction by jurisdiction basis, or can you assume that you need look only at the laws on co-ownership in the jurisdiction in which you agreed to be co-owners? In other words, does the law of the contract under which co-ownership was agreed (eg a research collaboration agreement) override the conflicting laws of other jurisdictions?
In IP Draughts’ view, the better answer is yes: if the RCA is made under English law, you look at English law rules on co-ownership for the entire international portfolio of IP. But there is no guarantee that a court in another jurisdiction will agree with IP Draughts’ analysis.
Might help be given by looking at general principles of private international law? Perhaps. IP Draughts has dipped his toe in this sea a few times, but has quickly run back up the beach in the face of cold Latin expressions such as lex situs, and lex fori.
A further fly in the ointment comes with the existence of supra-national IP, such as EU trade marks and the unitary patent. Do the laws governing such IP override any of the above? IP Draughts thought the answer was no, in light of statements in such laws that the IP is to be treated as an “object of property” to be governed by the relevant national property law. For example, Article 19 of the EU Trade Mark Regulation reads:
- Unless Articles 20 to 28 provide otherwise, an EU trade mark as an object of property shall be dealt with in its entirety, and for the whole area of the Union, as a national trade mark registered in the Member State in which, according to the Register:
(a) the proprietor has his seat or his domicile on the relevant date;
(b) where point (a) does not apply, the proprietor has an establishment on the relevant date.
2. In cases which are not provided for by paragraph 1, the Member State referred to in that paragraph shall be the Member State in which the seat of the Office is situated.
3. If two or more persons are mentioned in the Register as joint proprietors, paragraph 1 shall apply to the joint proprietor first mentioned; failing this, it shall apply to the subsequent joint proprietors in the order in which they are mentioned. Where paragraph 1 does not apply to any of the joint proprietors, paragraph 2 shall apply.
Similar statements appear in the European Patent Convention (Article 74) and the Unitary Patent Regulation (Article 7). In other words, there may be some complexity in working out which national law applies, but there is no principle of “international” property law to be followed. Unless you follow the logic of the UsedSoft case – which may be considered an outlier – discussion on this blog here.
IP Draughts was therefore very interested to read an article on IPKat this week about an Italian court referring to the European court (CJEU) a question about the rights of co-owners of an EU trade mark, and the opinion of the Advocate General in that case. Apparently the AG is of the view that one must look to national law to determine the rights of co-owners, rather than EU law. Phew, let’s hope the court agrees with their AG’s opinion!
The author of the IPKat article, Professor Eleonora Rosati, agrees with the AG, but she goes on to suggest using the EU Charter of Fundamental Rights as a basis for developing a harmonised EU approach to co-ownership.
IP Draughts is torn. He would very much like to see international rules on the transactional aspects of IP, and has had a conversation with several WIPO officials about this subject, in a meeting hosted by Professor Jacques de Werra of the University of Geneva. But he has strong reservations about using an EU policy instrument in a non-IP field, and decisions of the CJEU, as a basis for doing so. IP Draughts’ vision is for a set of laws that facilitate international trade in a neutral, pragmatic way, analogous to the United Nations Convention on Contracts for the International Sale of Goods (CISG), sometimes known as the Vienna Convention. He fears that Professor Rosati’s proposal would result in laws that include in their mix a focus on the political aspirations of the central bodies of the European Union.
Mr Pettifog
Mark Anderson
Paul Maclennan
Stephen Brett
Victor Warner
IP Draughts 
I can’t remember a single international commercial contract from my 41-year career that didn’t disclaim the CISG.
🤓
I’m also concerned that the IPKat is looking for ways for the EU to assert control over ownership of IP rights. The Italian TM issue appears to have been a referral for clarification over involvement of EU law in respect of EU TM rights, which in the view of the AG is that ownership is a matter for national law. Well done AG. So why is the Kat seeking to find EU legislation that can be interpreted in her favour to provide a means for the EU to assert supremacy?
The Charter of Fundamental Rights of the European Union is about protecting a person’s rights to their property, one of the common values we are supposed to share, “the rights, freedoms and principles” thereof, the EU is said to recognise. In fact, Article 345 of the Treaty on the Functioning of the European Union states:
“The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership.”
This doesn’t stop it objecting to IP rights being exercised in an anti-competitive fashion, but it goes too far when it (EU Competition Commission) takes the stance that the existence of IP (a monopoly) is itself anti-competitive (pharmaceutical inquiry). I can’t think why a union now dominated by members that have strong generics industries and invest nothing in pharmaceutical R&D would be so anti-pharmaceutical patents.
What is it about many IP academics that they want to change things that are not broken for their own personal or professional interests in order to increase the power of an institution that funds their research provided it is aimed at finding fault with the world of IP to enable it to take unnecessary action against the pharmaceutical industry?
On a separate note, obvious matters of concern in the battle for ownership of IP created during a collaboration are right to work, right to licence and right to litigate, both during a collaboration and when it all turns sour. Something that may not be considered is the effect of ownership (sole A, sole B, or joint A+B) on the prior art effect of US patents/applications under 35 U.S.C 102(b) and (c). Certain commonly owned patents/applications are disqualified as prior art when created under a “joint research agreement”, but that doesn’t prevent such prior art prejudicing the patentability of non-commonly owned applications.
I’m cynical about political institutions, less so about IP academics. Coming up with interesting new ideas is part of the latter’s role, even if I don’t always agree with them. In general, I’ve found IP academics more focused on practical issues than their colleagues in other academic law disciplines. I don’t immediately understand the final point about 35 USC 102.
In reverse order.
US prior art for one patent application may include an applicant’s other unpublished applications, which are often prejudicial to patentability due to the similarity of their own innovations. Patent office rejections may be overcome if both applications are commonly owned. This is met when both applications are owned by the same company, for example.
Additionally, commonly ownership may also include applications filed as part of a joint research agreement, so one party’s earlier patent may not invalidate a later collaboration patent application.
However, the common ownership provision may not protect all similar applications a party files, either solely, or jointly as part of a separate collaboration. Due consideration must therefore be given to the risks prior to agreeing to joint ownership. The provision is based on the ownership position when an application is filed so cannot be remedied later. Sole ownership, with an exclusive licence to the other party, may be safer.
Academics:
I’m glad your (greater) experience is as you say, so my concern may relate to a narrow area, which is pharmaceutical patenting. There are many articles and conferences directly targeting so-called evergreening, patent thickets, and such like, that are highly critical of the pharmaceutical industry. They are always one-sided, cherry picking information (usually repeating the same-old falsehoods) when I would expect academic research to provide a balanced assessment. The academic quality is poor and sensationalised, but presumably meets the needs of those (EU) funding specific projects.