Ownership and control of IP: report 1

Speaking at today's conference on Ownership and Control of IP Rights, Colin Pearson (right, Cleary Gottlieb Steen & Hamilton) gave a broad overview of the key issues relating to the ownership and control of patents, copyrights and other maintstream IP rights. He also raised a number of questions relating to the extent to which the use of trade marks might be controlled without actually destroying the right itself. The elimination of trade marks from use in cigarette marketing -- particularly in Australia -- and possible human rights limitations on the restriction of uses of trade marks consisting of designers' names and pharma products were discussed as cases in point. Other issues touched upon by JIPLP board member Colin included standards-setting arrangements, where FRAND (fair, reasonable and non-discriminatory) licences provide a framework within which the exploitation of IP is limited within industry-settled terms: many of these arrangements are dispute-riven and fraught with competition law problems.

Next up was Nigel Parker (Allen & Overy), speaking on IP joint ventures (JVs) and collaborations. Why enter a JV, he asked. They can reduce risk, rationalise costs, grant access to new markets, serve as a means for each partner to get to know the other better -- perhaps with a view to acquiring it -- and provide access to assets, including IP, which the partner won't sell outright. Quoting a PWC report, Nigel warned of the complexity of JVs: it takes three times as much paperwork, due diligence etc to set up a JV than will be consumed by a merger or acquisition.

Turning to the life cycle of a JV, Nigel reminded us that, at the point you enter into a JV, you must consider each phase of its life including its termination (JVs typically run for 7-10 years, while the IP rights they generate may run for a lot longer). Don't let the commercial pressures to conclude the deal comprise the quality of the actual agreement, he cautioned [the IPKat was delighted to hear this, since so many people keep telling him that comprehensive and accurate drafting is the enemy of the IP business deal]. Keeping control means reducing risk. Background IP rights, which pre-exist the JV and subsist in the hands of the partners, must be carefully considered: are they to be assigned to the JV, or merely licensed -- and what happens to them on termination of the JV? If there is an IP licence, a liquidator might describe it as an onerous licence and disclaim it [says the IPKat, on a recent dispute involving this area, see Butters v BBC here].

Nigel then took participants through a case study, a JV between GSK and Pfizer for the establishment of a world-leading HIV R&D company: one had a number of drug products in the pipeline, the other had the facilities for testing them. Aspects of the deal included variable equity interests, depending on whether the income derived from the background assets of either side.