All businesses, no matter how big or small, will own some form of IP. To create an original product, which is of interest as an IP object, requires much effort and costs. However, it is important not only to create something new, but also to be able to protect it from the encroachments of competitors.
Registration of intellectual property in Europe in this context plays an essential role, as it provides the necessary protection. At the same time, even at the stage of starting a joint business and intellectual property belonging to it, partners should think about how they will dispose of IP in case of separation. A competent approach to the issue and legal advice will help to avoid possible conflicts in the future.
In this blog post, we will highlight the issue of IP protection in Germany and what difficulties you may face if you manage joint intellectual property. It will be useful for you to read this information in order to know what to look for when drawing up and signing an agreement for the management of joint IP in Germany.
What disagreements may arise among IP co-owners
By German law, all rights to an invention belong to the natural person who created it and presented it to the world. Except when these rights are legally transferred to a person. In another way – through the conclusion of an agreement on the transfer of rights to IP objects in Germany.
Indeed, in order to develop or create IP objects, it is necessary to have sufficient funding. This requires some investment, made with the expectation of their payback and profit. The investor begins cooperation with the inventor in order to obtain benefits. And it would seem that such cooperation is beneficial to everyone, including global progress. However, if there are several inventors and they have attracted financing through an investor, then there is a wide field for disagreement.
Dispute between joint IP co-owners in Germany
Co-founders often have different business goals and interests, which can also change over time. This can influence their opinion on how IP should be used and whether investment should be made in their project.
It is a source of conflict that effectively delays or hinders decision making and wastes all business opportunities. To avoid this kind of conflict of interest, it is worth drawing up and concluding an agreement for the management of joint intellectual property in Germany. If such an agreement is signed, the co-owners know their rights and can defend them.
Legal concepts for IP co-ownership in Germany
Objects of intellectual property are understood as works of science, literature and art, programs for electronic computers (computer programs), trademarks and service marks, geographical indications, phonograms, appellations of origin of goods, inventions, utility models, industrial designs, selection achievements, topologies integrated circuits, production secrets (know-how), as well as other IP objects that are granted legal protection in accordance with international treaties.
The concept of ownership applies by default to cross-ownership, unless the owners have a common contractual purpose that qualifies as an Uncontested Cross-Ownership. In any case, the conclusion of a deal on the management of joint intellectual property in Germany will give you a guarantee that you can exercise your rights at any time. With the advent of intangible assets, namely, objects of intellectual peculiarity, equity participation in the business acquired its own, namely:
- Each co-owner owns his own share in the property right, which can be equated to his contribution to the invention, but in case of disagreement will be identical to the share of every other co-owner;
- Each co-owner is free to buy out all the assets of the company. Thus, he becomes the sole owner of the IP;
- Each co-owner may independently use IP in Germany only to the extent that this does not prejudice the right to use of any other co-owner;
- Each co-owner can take the steps necessary to maintain or protect the joint IP without the consent of the other party, and may require them to give their consent in advance. This provides the right to sue infringers of exclusive ownership arising from joint IP.
If not excluded by agreement, each participant in a fractional ownership may request termination of ownership of a portion of the IP. Competent drafting of the agreement on the management of joint IP in Germany will help to avoid misunderstandings in the future.
Separate ownership of joint IP in Germany requires the co-founders of the invention to pursue a common (most likely economic) goal, for which they have an explicit partnership, which owns all ownership rights in the IP. An agreement must be concluded between the parties, where all the obligations of the parties are clearly spelled out.
- IP rights licensing in Germany can only be carried out by a partnership and not by an individual partner.
- The share in the partnership as such is not subject to assignment.
- All partners jointly represent and manage the partnership, unless otherwise agreed. If one or more partners are appointed as managers, the rest are excluded from management. The managing partner can legitimately represent the partnership.
- All parties participate in the proceeds from the exploitation of the IP according to their equity participation. Unless otherwise agreed, damages shall only be reimbursed on liquidation of the partnership.
Being aware of all the risks associated with joint property rights and possible conflict situations allows us to avoid and prevent them. Any form of co-owner deprives each partner of the opportunity to fully enjoy the benefits of IP or to have full control over IP objects. For more detailed information, do not hesitate to sign up for a legal consultation on the specifics of managing joint intellectual property in Germany. We will quickly connect you to the top-flight legal professionals who deliver customised legal advice.