Joint ventures (JV) have lower capital costs than 100% acquisitions, which makes them increasingly popular during times of economic uncertainty. JV partners however, are likely to be actual or potential competitors. This has important implications for how one shares IP with a JV partner, and for what happens to jointly developed IP when the JV folds. Who will own background IP on termination of the JV? Will a partner or 3rd party will have continuing access to the IP post termination?
Before committing to the JV, both parties must undertake proper IP due diligence. Parties will need to examine validity, enforceability, ownership, scope and protection of IP. They will also need to examine the legal regime of the countries where the JV will operate: What are the laws? Are they enforced? How is IP protected in practise? The laws of country where JV may be operating may also restrict how the JV and ownership issues can be structured.
The article also recommends that different IP strategies be considered, including the “black box” strategy and the “killer apps” strategy.
IP leakage must be minimized, and trade secret and confidentiality best practices must be adopted. This may include joint training on confidentiality so that neither party can claim that they did not know what the rules are.
- Robust IP Agreements must be in place before parties proceed with a joint venture.
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