IP Insights: What to bear in mind when making joint inventions

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While collaborations between different companies are more and more common, it is astonishing that jointly owned patents lead to legal issues and questions which are still unresolved and not taught in the textbooks. A playing field for us practitioners. Jan, you are one of these practitioners and regularly advise our clients in this field. Could you please give us a brief overview of such cases?

The good case is when both parties are aware of what they are doing: If they combine their knowledge and capacities on purpose and with a specific aim. For instance, we regularly advise clients on publicly funded R & D projects with clearly defined work packages, where it is known beforehand if and where joint inventions may be created. In these cases, the parties can define their future interests in the projected invention, predict potential conflicts and – finally – write this down in an agreement. Here, the parties can define their respective exploitation rights: Are they allowed to sell the invention? And if so: Can they even sell it to competitors? Who is allowed to use the invention? And does the active owner have to compensate the other co-owners? These are typical questions which arise during negotiations of R & D agreements. In most cases, they can be answered to the benefit of both parties in view of their respective market position and specific interests. A second group of cases are those in which the joint ownership occurs “unintentionally”. Be it among friends on the occasion of a different collaboration, be it that a part of the invention is stolen and then further developed.

In the past, an important example of this second group originated from the German Act of Employee Inventors. If the employer did not correctly transfer the invention from the inventor to the company, the inventor was still a co-owner, in many cases together with its employer – the origin of many disputes. Which cases do you like most, Jan?

I like the first group. When drafting the R & D contract, you create a small piece of law, you can weigh the different interests and literally bring the parties together. The second group, in contrast, can lead to awful conflicts.

Let's use the “classical” example of the automotive industry: Imagine a car maker and their supplier having invented a new product which then turns out to be successful on the market. Questions arise: “Is the car maker entitled to source the new devices from other suppliers? And vice versa: Is the supplier entitled to sell the device which it invented itself to other car makers? Even these fundamental questions are not clearly solved in our existing law.

I always find it astonishing that these very simple questions are not easy to answer.

The reason is that our patent law is silent in that regard. It simply reverts us to general civil law which does not differentiate between sailing boats, apple trees, and patents. What is appropriate for apple trees and sailing boats may not be appropriate for patents.

Right. In 2005, the Federal Court of Justice issued a very important decision that answered at least some of these questions. If only one (first) co-owner is practicing the invention, the other (second) co-owner does not automatically receive a remuneration. So, the second owner must engage with the first owner and request a broad exploitation agreement. As part of such an agreement, one could define that the second co-owner is not even allowed to use the invention – but in turn receives a compensation. In my understanding, this decision was received very well.

It was really a good decision. Unfortunately, it left many questions open and the disputes continued. For instance, it is still not clear if …