Technology Collaborations and Joint Ventures: Intellectual Property Rights Require Smart Planning

Neil P. Ferraro

December 1, 2008

6 Min Read
Technology Collaborations and Joint Ventures: Intellectual Property Rights Require Smart Planning

Ferraro: Convergent IP.

Joining forces with another company or a university can be the best or only way to bring a new medical technology to market, especially in a weak economy. However, this approach requires company executives to make decisions on some important issues--especially with regard to the intellectual properties (IP) to be handled or developed by the partnering organizations.

Key IP-related issues to be addressed when considering a joint venture include what types of organizations will make a suitable partner; what is the strength of the partners' existing IP; whether each partner is free to use required technologies; what entity will own newly developed IP; and what rights should the joint developers have.

First Steps

Company executives looking to partner with another IP holder should start by learning about the strength of the IP covering the technology. They should get educated about what prior art existed, and investigate whether the technology is protected in key geographical markets and whether competitors can easily design around the patents.

In the medical device market, such predeal diligence can often smoke out weaknesses that could affect deal valuation. For example, a prospective partner may boast about its IP position, suggesting that its medical device patents will prevent others from competing in the area in which the executives' company intends to make significant investments. However, that is only one piece of the puzzle, and highlights a common misperception. Although a company may think that it is free to use a technology it has licensed, there may be third-party patents covering some aspect of the technology. Early on, companies should make an effort to uncover and deal with any third-party blocking patents.

Company executives should also consider the scope of protection available to the patentee. A medical device should be compared to the prior art to determine what aspects of the innovation are protectable. Even a seemingly insignificant technical aspect of the device can be an important commercial advance warranting creative patent protection strategies. Beyond the technical advances embodied in a device, for example, a commercially important innovation may lie in the way a healthcare provider or patient interfaces with the device.

Other diligence inquiries will help uncover whether a prospective partner is the sole owner of the technology it is offering. In the medical device industry, doctors will oftentimes offer their inventions to a company. When considering a partnership with such a company, executives should consider any underlying agreements with the doctor and the prospective partner and ensure that the IP rights have been assigned to the company or university with which they are negotiating. If this background IP is important to future product development, executives will want to be sure that their partner is the sole owner. Otherwise the doctor may license the IP to another party that will immediately become a key competitor.

Joint Ownership Issues

Once company executives have completed their due diligence and decided to go forward, they will need to hammer out an agreement with their new partner. The issue of most concern in any collaboration is ownership, which affects not only practical considerations (e.g., what entity will control the filing of, and payment for,future patent applications), but also who can enforce the IP against third parties.

Most agreements simply state that any future patents will be jointly owned. This might seem like a good practice, but oftentimes is not. Executives can seriously devalue the IP if their company has joint ownership but doesn't have an agreement covering all bases.

When patents are jointly owned, either party can license them without the coowner's approval. Joint ownership also poses problems if one of the owners wants to sue someone it believes is infringing the patents, or if the owners are sued for infringement. Which coowner calls the shots in the litigation? Unless the agreement says otherwise, neither coowner can sue without the other's consent and cooperation, setting up a potential situation where rights cannot be asserted.

On the other hand, a suit by the patent owner could jeopardize the strength of the patent and subject it to validity attacks, potentially leaving the nonowner licensee with a useless patent. The best protection is to make sure that the company has a say against whom the patent will be asserted. Just as one example, a company might have a relationship with or otherwise not want to enforce a patent against a particular party, especially where insubstantial damages are at stake.

The rules governing joint patent ownership in the United States are unique. Therefore, if a company jointly owns a patent in the United States and wants to obtain patents abroad, it may need to address coownership issues differently.

Effect of the CREATE Act

Maximizing patent rights in inventions arising from the collaboration may also require attention to the provisions of the Cooperative Research and Technology Enhancement (CREATE) Act of 2004.1 The CREATE Act allows parties in a joint research agreement to obtain patents that might otherwise be precluded by the earlier work of one party, allowing the parties to then build a broader and stronger patent portfolio that might otherwise be unpatentable.

Suppose, for example, a company wants to develop a new medical device based on a university's preexisting patents. The two parties collaborate and jointly develop new IP, and the company now seeks to obtain a patent. Absent a prior written agreement, the prior university work can preclude the company from obtaining a patent on the newly developed medical device. A joint collaboration agreement can avoid such a loss.

The agreement should also spell out whether the university has any rights to the jointly developed, but solely owned, IP. Cross-licensing and field limitations in the agreement can be helpful to carve up these rights should they cause a negotiation roadblock. Companies should be careful, though, because some joint collaborators may use their preexisting IP as a means to secure a higher royalty.


To minimize IP problems in collaborations, company executives should negotiate an agreement at the start. Companies should perform their due diligence, then specify ownership, control, and use of each participant's technology, as well as new technology and improvements developed during the collaboration and remaining afterward. Addressing these issues at the outset can avoid some of the problems of joint development and head off disagreements down the line.


1. Cooperative Research and Technology Enhancement (CREATE) Act of 2004, P.L.108-453.

Neil P. Ferraro is a shareholder in the intellectual property firm of Wolf, Greenfield and Sacks PC (Boston). He is a member of the firm's mechanical technologies and licensing and transactions groups and co-chairs the Boston Patent Law Association medical device committee.

© 2008 Canon Communications LLC

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