What you need to know
Joint ownership of newly created intellectual property (IP) can be more complicated than it first seems, generating a range of unexpected and unwanted difficulties.
What you need to do
- Care should be taken when negotiating the terms of collaboration agreements where new intellectual property will be created.
- At the outset of negotiations, consider how each party may want to use the new IP and whether joint ownership of IP is the best approach in the circumstances. This can help to avoid complexities regarding use and commercialisation of intellectual property in future.
- Ensure collaboration agreements specifically address issues of use, commercialisation, assignment and licensing.
- Always seek legal advice when negotiating collaboration arrangements.
Brand collaborations
Brand collaborations, particularly in the food and beverage sectors, have become increasingly common in recent years. These can be an innovative and clever marketing tool, particularly when the collaboration involves brands that are already well-known and highly regarded in the market.
In a recent high profile collaboration, Messina, a specialist gelato chain, partnered with iconic ice-cream company Peters Ice Cream to create a special "Drumstick x Messina" range. The range incorporated Messina's unique flavours with Peters' ice cream, and product packaging contained dual branding together with a series of artistic ice-cream cone shaped designs.
Other recent brand collaborations include Arnott's Shapes and Vegemite who recently introduced "Vegemite and Cheese" flavoured Arnott's Shapes, as well as the slightly more unusual "Cadbury Dairy Milk with Kettle Sea Salt" chocolate product.
While a very effective marketing tool, such collaborations can lead to headaches down the track if the terms of the collaboration agreements are not carefully considered at the outset. The following are a few considerations that each party should bear in mind before entering into such an agreement.
Dealing with confidential information
Confidential information will be exchanged as soon as discussions commence about the prospect of collaborating and will likely continue to be generated and shared throughout the arrangement.
Controlling the use and disclosure of this is important to the success of the collaboration. This includes everything from the decision to work together on a new product, product and packaging designs, recipes and the like.
This may be dealt with by executing a standalone confidentiality agreement/NDA before a collaboration agreement is negotiated. Confidentiality should also then be specifically addressed in the terms of a collaboration agreement which should also be clear as to whether the earlier agreement remains in effect or is replaced by the terms of the collaboration.
Ownership of IP - options and considerations
While joint ownership of newly created IP through a brand collaboration (for example, the packaging and recipes created in each of the above examples) may seem like a fair and logical option, in practice, this approach can trigger a range of issues. Such issues can include restrictions imposed by law on the rights one party has to exploit jointly owned IP with third parties without the consent of the other party, as well as problems with enforcing rights against third parties.
Key points to consider when drafting contractual terms include:
- ensuring each party remains the owner of the IP it brought to the collaboration;
- considering respective rights to use and licence the newly created IP, whether or not consent from the other party is required, and what (if any) modifications can be made to the newly created IP;
- considering if and how the newly created IP is to be protected and who will undertake that work and bear the costs of doing so;
- considering how revenue is to be shared between the parties, particularly where one party is using the IP in a way that generates more revenue than the other; and
- considering how enforcement proceedings are to be dealt with.
For these reasons, a more straightforward approach may be for one party to own the newly created IP and license it to the other party. Alternatively, the IP could be divided between the parties based on input or as the primary/secondary user of the IP. In many cases, such as Arnotts and Cadbury in the above examples, there will be a primary IP user. Therefore, such an arrangement could be an effective solution in the circumstances.
Authors: Joanna Lawrence, Counsel; and Ashley Johnson, Senior Associate (Admitted in New Zealand, not in Australia).
