You may often require some assistance when developing a unique, inventive product, substance or formula. Having a suitable co-creator can make or break your product’s advancement. Certainly when developing a product with another individual, there are legal aspects to consider regarding ownership of the intellectual property, applying for a patent and then commercialising the product. Below, we look at these issues to assist with understanding the frameworks you will need in place to protect you when dealing with the product.

Initial Agreements

If you have a product idea in mind but require a particular skill set to bring it to life, then it’s invaluable to spend time searching for the right co-creator. A non-disclosure agreement can help protect your product’s aspects that you have already developed, and ensure that they can’t then go off and recreate your idea. Understanding the right kind of assistance early on is very important to ensure you can move forward successfully.

Development Phase

Once you have found the right co-creator, you should explicitly set out what each party will develop to help determine who owns what intellectual property and how you will structure your patent application. For example, you will need to make note of the features that you have solely developed, the ones your co-creator has developed and then the features you have developed together. You will need to consider how each of you has contributed ‘inventively’ to the product’s development, not merely who screwed on components or did the paintwork. It is important to make sure this is done correctly in the application as a patent may be invalidated later on if the correct individuals are not named appropriately.

During this phase, a written agreement between both parties will assist with clearly setting out your role in the development process, the ownership of the intellectual property and whether there will be any payments made to your co-creator for the assistance they are providing. If they are to be an employee of your business, then it will need to be very clearly set out in their employment contract as to what aspects of the invention and their intellectual property in the course of development will belong to you.

Application Stage

Now that you are ready to apply for your patent, it is critical to ensure that you have the correct individuals named to ensure it is a valid patent. You must name yourself and your co-creator as inventors and then also name who will own the patent – this is when it can get tricky. The owners of the patent need to be named as either the inventors (yourself and your co-creator) or someone you have transferred ownership rights to (e.g. your company).

There have been many cases where it has not been clearly set out in the development phase who owns what intellectual property or the owners have incorrectly applied for the patent, resulting in disputes or the patent invalidated.

One such example is the case of Stack v Davies Shephard [2001] FCA 501. In this case, Stack and Grieves were the inventors and the application was filed citing Stacks and Grieves as joint inventors. However, it only listed Stacks as entitled to ownership of the patent. As it turned out, Stacks and Grieves had agreed that they should apply for the patent in this way because they were going to transfer the ownership to a company that they were both going to own and control. Despite this, the Court held that Stacks was not entitled to sole ownership of the application and held the patent to be invalid.

It’s important that you understand the legal ramifications of a patent application should any disputes arise between yourself and the co-creator. You will still need to list them as an inventor on the features they invented, despite you wanting to separate from them in the commercialisation process or wanting to list only yourself as an entitled owner. As part of the patenting process, you are required to file a notice of entitlement within which you are required to state the nature of your right to the patent. If you try and incorrectly list the inventors or ownership rights, then your co-creator can oppose the application or challenge its validity if it is approved later on.

Key Takeaways

A written agreement setting out each party’s ownership rights before applying for the patent can help avoid expensive and lengthy court proceedings down the track. It is prudent to seek legal advice early about the type of agreements you require and about the patent application process to ensure you protect your product and your business. Questions? Get in touch with out IP lawyers on 1300 544 755.

Bianca Reynolds
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