Issues if Your Partnership Will Own, or Create, Intellectual Property

Partnerships can be a great way to start a business. The ability to share in profits and losses, not to mention share in each partner’s expertise, can lead to a very profitable business venture (so long as you understand the pros and cons of a partnership).

But even if you know everything there is to know about partnerships, and you decide that it’s the right business entity for your business venture, there’s one area of partnerships that many people overlook when they’re planning the partnership, or drafting the corporate documents, like the partnership agreement: intellectual property.

Outlasting the Partnership

Just because you may opt to share equally in what the partnership produces or does, doesn’t mean that you also want to share in the intellectual property of the partnership, or in the continued revenues or benefits of the intellectual property that may be created by a partner.

Remember that in some cases, the intellectual property, and the value or royalties or profits that may come from that intellectual property, may outlast the partnership.

In fact, even long after the partnership is gone, whether by business failure or the voluntary decision to end the partnership, the intellectual property lives on, and that can leave the (former) partners fighting over who owns it and who gets to share in the profits from, or value of, that intellectual property.

Don’t Assume Equal Ownership

Don‘t assume that just because someone creates intellectual property for the partnership, or creates it while they’re doing their duties for the partnership, that the intellectual property that is ultimately created and used, automatically belongs to the partnership, or that it is automatically jointly and equally owned by the partners.

Pre-Existing Ownership

The other issue that arises, is when partnerships bring in pre-existing intellectual property to the partnership.

For example, someone may already have a brand name, or a slogan, or a jingle, or artwork that is now brought into use for the partnership’s benefit. Even the understanding that the partnership can use the intellectual property, doesn’t say anything about the long term ownership of the property-especially after the partnership ends.

In fact, there is authority that says that the partner who “brought in” the intellectual property to the partnership, will be the one to keep it when the partnership ends.

Drafting the Partnership Agreement

All of these presumptions of who owns intellectual property in a partnership can be overcome by simply addressing the issue in your partnership agreement.

This is especially important if the partnership is one that is based in protectable material (for example, a partnership to create a comic book or website or some new invention that is patentable), or if one or more partners’’ main responsibilities for the partnership is the creation of intellectual property.

Remember that whenever there is intellectual property for a partnership, you’ll want partners to sign and agree to confidentiality or non-disclosure agreements as extra security.

Call our West Palm Beach commercial litigation attorneys at Pike & Lustig to help with your business’ intellectual property legal issues.

Source:

sloanreview.mit.edu/article/developing-effective-intellectual-property-partnerships/