In the aerospace industry, collaborative or joint development projects are common. Whether companies are participating in a traditional joint development project or in an open innovation arrangement, one challenge they face is how to protect the intellectual property (IP) created in the collaborative development.

All parties to a collaborative development project may have their own proprietary IP that they bring to the project. Such IP may be referred to as Background IP. Companies should clearly indicate to their collaboration partners what Background IP they are providing to the project. In the case of copyright, trademarks, designs or patents, listing and allowing the use of Background IP may be relatively straight forward. In the case of trade secrets, there is a risk that one party may (accidently or otherwise) disclose or misappropriate the trade secret of another. Non-disclosure agreements (NDAs) are often used in an effort to protect confidential information such as a trade secret. However, NDAs are only as good as the conduct of the parties (and their employees or contractors), and a party’s ability to compensate for any breach of the NDA.

In the course of the collaborative development, new intellectual property may be created. Such IP may be referred to as Foreground IP. It is important that all parties to a collaborative development project agree at the outset who is to own any Foreground IP generated during the project. Options include one party owning individual Foreground IP, or two or more parties jointly owning individual Foreground IP. A party who is not an owner may receive a license to practice and/or sublicense the Foreground IP. Parties may also carve out commercial fields of use, or geographic jurisdictions, for ownership or licensing of the Foreground IP. In the absence of any prior agreement as to ownership of Foreground IP, IP created solely by one party will belong to that party, while IP jointly created will be jointly owned.

Joint ownership of IP can be messy. Different jurisdictions have different default rules with respect to joint ownership of IP. For example, in the US, one owner may license or transfer their patent rights to a third party without the consent of the other joint owners. In Canada, while all owners must consent to any license or enforcement of a jointly owned patent, each individual owner may transfer their entire rights to the jointly owned patent to a third party, so long as the transfer does not dilute the interests of the other owners. Simply obtaining the patent rights may also be a challenge if one party refused to participate in the prosecution of an application for any Foreground IP. As such, it is often much easier for the parties to agree to have one owner of a Foreground IP. At the very least, how jointly owned Foreground IP is to be funded, secured, licensed, enforced or otherwise treated should be agreed upon in a collaborative development agreement.

There are also alternative strategic arrangements that can be taken for ownership and sharing of IP that can apply to collaborative developments. A patent pool may be set up for a group of companies to “pool” their knowledge. All members may share their Background IP and add Foreground IP to the pool of knowledge. By participating in a patent pool, companies may receive favourable rates when licensing Background or Foreground IP. In some circumstances, combining patent pooling with open innovation may allow companies to focus on their core strengths while licensing ancillary know-how from others at a favourable rate.

Participation in collaborative development may be a must for many companies in the aerospace industry. These companies would be well served to have and periodically review their IP strategy as it pertains to collaborative development in the industry.

Author: Fred Barbieri