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Suppose you are thinking of starting a new business, and you are working with a few business partners, family members, or friends. One of the greatest assets you can have as a new business is intellectual property (IP). The IP you develop as a business not only identifies you as a brand, but IP can increase in value over time. A collaborator is any individual or business that has co-created and will share your IP. A collaborator can be:

  • members within your business or organisation (business partners or employees); or
  • overseas organisations that want to license your IP to.

In this case, you must establish the IP rights between each collaborator from the very beginning. Therefore, this article will explain what you, as a collaborator, own in your business regarding IP.

Step 1: Determine Your Business Structure 

One of the first steps in setting up your business is establishing the right structure for your business. For example, if you have substantial growth plans for your business, a company may be the best structure for you. A company is a legal entity that can own your IP. Some businesses may also incorporate a dual company structure, with the holding company owning all of the IP rights.

Once you determine your structure, you will also need to have relevant documents in place outlining each party’s rights and responsibilities. For example, company documents outline the rights and responsibilities of each shareholder and director of a company. These documents will also contain IP clauses that explain which party owns IP and how much IP each party will retain.

Step 2: Register Your IP

Once you have a structure in place, you should start thinking about registering your IP and determine if your partners will jointly own your IP. 

There are a few ways you can protect your IP. The most common forms of IP protection include:

  • trade marks – to protect your business name or logo;
  • design registration – to protect the overall appearance of a unique product or invention; and
  • patents – to protect the functionality of your product or groundbreaking invention.

More than one entity can own your IP, which is usually the case for family-owned businesses or business partnerships. 

If you are unsure what type of IP you own or should register, get in touch with our IP experts at LegalVision.

Step 3: Get Your Contracts Sorted 

Contracts are a vital part of any business relationship, setting out the rights and responsibilities of each party. Among the many important provisions, a contract will also set out how your IP will be owned and used.

Depending on the type of arrangement, you may need to get your contracts drafted quite early on in your business. For example, if you have an e-commerce business, you will likely need the following key documents before you launch your business:

  • website terms of use;
  • terms and conditions;
  • privacy policy; and
  • a software as a service agreement (if your business is a software or web/mobile application).

These documents set out how each party will own any old IP you have developed or new IP you plan to develop. Before entering into a business relationship with a collaborator, you should discuss how your IP will be owned and used. A contract is a great way to formalise your business arrangement and set out any dispute resolution methods if you disagree with how IP can be used, licensed, or modified. 

Collaborating with an overseas entity can be quite advantageous for your commercial growth plans. So, you must outline your business relationship very clearly in your contracts. Generally speaking, the IP you own will depend on how much you have contributed to the development of the IP. 

The relationship you have with a collaborator can vary depending on:

  • the type of business you have;
  • your commercialisation and growth plans;
  • your plans to develop innovative IP; and
  • the number of collaborators you want to commercialise with.

The best way to protect your IP is to seek legal advice. Our team of lawyers can review your plans with your collaborators to determine the most appropriate protection you will need. We can draw up the relevant agreements to secure your IP, whether these agreements are:

  • IP assignment agreements;
  • IP license agreements; or
  • terms and conditions.

What Happens if One Partner Creates New IP? 

When it comes to deciding whether you or your collaborator own new IP, most legal professionals will want to review the relevant agreement between the parties. In this case, it is vital that you seek professional advice to draft the agreements early in the business relationship. Generally speaking, if somebody creates new IP in the course of the business relationship, then the business will own the IP, not necessarily one party or the other. A key consideration is determining the purpose for which the IP was created. Was it to further the market growth of the business? 

If your relationship with a collaborator is a short-term relationship, you should clearly specify the ownership of any new IP in the agreement you enter into. An example of a short term relationship could be when you license your IP to an international collaborator to test the market response to your innovation in a new country. 

Key Takeaways

If you engage with multiple collaborators in your business, you may have questions about who owns your IP. Ultimately, you should draft contracts that determine who will own any IP you create in your business. Registering your IP and determining your business structure early on will also help clarify things regarding IP ownership. If you have any questions, LegalVision’s IP lawyers can help. Contact them on 1300 544 755 or fill out the forms on this page.

Frequently Asked Questions

When should I register IP?

There is no right or wrong time to register your IP. Generally speaking, the sooner you formally register your IP, the better. Most IP registers work on a first-in first-served basis, so you should secure it quickly once you have determined your IP. 

When should I draft my contracts?

You should consider drafting your contracts early on in the business relationship. A contract will set out the rights and responsibilities of each party in the contract. You should have your contracts drafted by a legal professional.

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