Author: Marsha Simone Cadogan, Barrister & Solicitor
Research institutions sometimes require complementary know-how, capital, or other resources to adapt their research output to industry specifications. Collaborative research agreements are contracts between two or more parties about a product’s development, commercialization, derivatives, and modifications. These agreements may introduce new software, bio-technologies, or re-designed products and services to consumer markets. How intellectual property (IP) is developed, acquired, or assigned between the parties and how they are monetized, accessed and used by third parties are often important considerations in these agreements. Negotiating and reaching a consensus is not always an easy feat.
Deciding Ownership, Rights and Responsibilities:
The extent of each party’s involvement in the research and development process and the commercialization of the resulting IP can determine the degree of influence that the party has in the business activity. These agreements are classified as commercial contracts. Common law courts in Canada are unlikely to interfere with the contractual commitments of commercial parties (unlike in consumer contracts) outside of extenuating circumstances. Unless otherwise disproved by extenuating circumstances, it is assumed that the parties have more or less equal bargaining power and have a fair understanding of the intent and meaning of their commercial relationship. Therefore, parties to a collaboration agreement may want to consider the terms they agree to before signing the contract.
Topical areas may include understanding what ownership of inventions or propriety interest means to each party, clearly identifying IP that each has brought into the collaboration, defining material issues that affect ownership and rights in background and foreground IP, deciding title, interests, and rights to produce IP jointly and the type of involvement that licensees or sub-licensees can have in produced content. Another negotiable matter is each party’s financial and capital investment, especially regarding budget outlays and how expenses, royalties and payouts are to be apportioned.
In some collaborative research projects, one party may be interested in licensing content to a third party. This may be to facilitate derivatives, product improvements, or distribute, market, or sell the final product. Determining royalties, their apportionment, and how the licensed intellectual property content will be managed are among the essential points to consider before committing to a collaborative research agreement. The parties may also want to consider whether third-party licensing is the best option or whether other commercialization strategies should be canvassed.
Understanding each party’s role in the collaboration process, their interests, expectations, and best alternatives helps structure and inform the contract negotiation process.
This post is for general information only, and is not intended to be legal advice.