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Consultants and collaborations: beware patent ownership pitfalls

Posted: 11/08/2023

In the ruling of OUI v ONI, IP ownership in the context of an academic entity was at the core of the matter. The law that lay at the root of that dispute concerned ownership of inventions, as specified in the UK Patents Act 1977. This law can also impact on the relationship between companies and retained technical consultants, and between companies collaborating in a joint project. 

Companies sometimes ‘buy in’ expertise in the form of ad hoc consultants to provide specialist input on particular projects. Most companies are now wise to the essential pre-requisite of a non-disclosure agreement (NDA) when the services of a consultant are contemplated, in order to ensure that company secrets are respected when the consultant completes the assignment and moves on. However, what can sometimes be either neglected or overlooked in terms of importance in these contracts is ownership of any intellectual property (IP) that may arise during the term of the consultancy. 

Particularly in cases where a consultant is being brought on board to provide technical expertise in relation to an innovative idea that the company is pursuing, it is vital to document in the consultancy contract what contribution the consultant is expected to make to the project and who will own the IP, should any arise as a result of the collaboration.

It is rarely ever in the interests of a company commissioning the consultant to agree either to share the ownership of the IP with the consultant, or indeed to concede any such rights to the consultant at all.  Whilst this may seem unfair or even harsh on the consultant, different arrangements can be problematic, especially if patent applications are filed by the company to which a consultant has contributed.

UK patent law specifically deals with inventions made by employees in the course of their employment and provides explicitly (as a default position) that they will be owned by the relevant employer. Consultants are in a different legal situation. The default position is that a patentable invention will belong to the person who devised it. A person who has made a real contribution to an invention may be a ‘devisor’ for this purpose. Usually, a consultant is being paid by a company for services rendered, so it would seem that, ‘morally’, the company should own any IP that arises. However, unless there is express documentation to this effect, it may not be the case.

Taking the example of patents, if a consultant has contributed to an invention of a company in a meaningful way, and the invention is then patented, the consultant may be entitled to an ownership stake in any patent that is filed (unless the consultant has signed a contract in advance that specifically provides otherwise). 

Even worse, the consultant, once the consultancy contract is over, may decide to go off and file a patent application based on the contribution that was made to the company’s project. This is a branch of UK patent law called ‘patent entitlement’.

Unfortunately, it is an area of the law that is replete with examples of companies and consultants who once worked together happily for a while, but then fell out over a question of relative contributions to (and hence ownership of) an invention described in a patent. Complicated factual questions may arise as to who contributed what, which is an enquiry often fraught with acrimony, with different recollections and different value judgments being placed on the contributions by the individuals involved.

By far the simplest way around these kinds of disputes is to have an ‘up front’ contract with the consultant, that provides that any IP developed during (or as a result of) the consultancy belongs exclusively to the company – no ifs or buts.

Similar considerations apply when contemplating a collaboration with another entity, for example, by way of a joint venture, pursuant to which each JV partner will contribute technical expertise. It is always prudent and highly advisable before embarking on such collaborations to specify in a contract – in advance – the ownership of any jointly developed IP.

In addition, it is highly advisable to specify in such arrangements what pre-existing IP each partner already owns - and also how the parties propose to manage the ownership of any IP that is developed during their partnership. If this is not dealt with ‘up front’, the spectre of a patent ownership (or entitlement) dispute between the companies (and acrimonious arguments about the relevant technical contributions of each side) may dog the future exploitation of the IP, by either party. 

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Penningtons Manches Cooper LLP

Penningtons Manches Cooper LLP is a limited liability partnership registered in England and Wales with registered number OC311575 and is authorised and regulated by the Solicitors Regulation Authority under number 419867.

Penningtons Manches Cooper LLP