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IP Strategy

Joint Development Agreements: Pros and Cons of IP Collaboration

Entities enter into joint development agreements, joint ventures, partnerships, and other forms of IP collaboration for a multitude of reasons. These agreements—between a corporation and a similar business, research university, supplier or vendor, subcontractor, design house, or any other third party organization—present enticing advantages. This is especially true when a business can’t fully develop an invention or bring the resulting product to market on its own, or when the two entities have mutual goals. 

Pros of Shared Intellectual Property

The advantages of joint development agreements are certainly appealing, especially for organizations with limited resources. Working together to research, develop, and commercialize an invention can mean sharing resources, costs, and risks. R&D can be done more efficiently, which results in bringing innovation to market faster and, potentially, a better end product. These benefits can also lead to additional intellectual property being developed and increased revenue. 

Of course, an organization must carefully consider the downsides of a joint development agreement alongside these advantages.

Cons of Joint IP Ownership

During the research and development process, there is the possibility of each party contributing unequally to the end product. In this case, joint IP ownership may not consider the effort each organization put into the project. One area that unequal contributions could impact is which organizations are sharing existing IP to bring new products to market. 

Intellectual property, whether it already belongs to one organization or is currently in development under a joint venture, can be compromised more easily during collaboration. There is a loss of control over confidentiality as IP is shared with your new partner’s employees and vendors. Other management and administrative concerns should also be considered, especially in regards to who is responsible for the patent application process. 

After a patent is granted or your IP is otherwise protected, its owners are responsible for licensing and litigation decisions. When IP is owned jointly, these actions become more complex and are somewhat dependent on what regions you’re operating in. Determining responsibility for these actions before embarking on joint R&D is imperative. 

Lastly, a joint development agreement must address each of these pros and cons, making it a complicated contract. This makes termination, if necessary, all the more difficult.