Source: https://ladas.com/rights-co-owners-license-patent-rights/
Timestamp: 2019-04-19 19:13:07+00:00

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It is sometimes tempting when entering into a joint research agreement to agree that both parties will jointly own any patent rights arising from the collaboration. However, unless the rights of each party are clearly set out in the agreement, this can lead to complications and may be dangerous.
It should be noted that in states such as California and Texas where community property laws apply, there may be joint ownership of an invention made during the marriage and any patent arising from it even if only one spouse is in fact an inventor.6 Where an inventor may be subject to such a law, it is therefore a good idea to make sure that the non-inventing spouse agrees that the patent should not be regarded as community property or agrees to any transfer of rights that may occur.
Few, if any, countries follow the practice in the United States of allowing joint owners to license their patents without the consent or need to split income from a license with the other co-owner of the patent being licensed.
Many countries, such as Australia, China, France, India, Japan, Korea, Netherlands, Spain and the United Kingdom have specific provisions in their patent laws dealing with this issue. In others such as Canada and Germany, the issue is addressed as part of the general law.
The most common position in other countries having specific provisions in their patent laws on licensing by co-owners is that this is permitted only with the consent of the co-owner.
In all three of these countries, the law derives from the same common law tradition as exists in Canada and is discussed below, but has been subject to legislative codification which began with Section 37 of the UK Patents and Designs Act 1907 which simply provided that where a patent was granted to two or more persons, “each of such persons shall be entitled to use the invention for his own profit without accounting to the others, but shall not be entitled to grant a licence without their consent,”.
(b) grant a licence under the patent or assign or mortgage a share in the patent or in Scotland cause or permit security to be granted over it.
Section 37 permits the comptroller to order the grant of a license upon request by any proprietor of a patent if he sees fit to do so. This provision does not, however, seem to have been used.
One of two or more joint proprietors of a patent may without the concurrence of the others bring proceedings in respect of an act alleged to infringe the patent, but shall not do so unless the others are made parties to the proceedings; but any of the others made a defendant or defender shall not be liable for any costs or expenses unless he enters an appearance and takes part in the proceedings.
(c) none of them can grant a licence under the patent, or assign an interest in it, without the consent of the others.
Section 17 permits co-owners to seek a direction from the Controller on a variety of matters, including possible grant of a license, which he may decide as he sees fit.
A consequence of co-owners having an undivided share of the patent is that enforcement requires agreement by all of them.
Essentially similar provisions are found in Article 66(2) of the Dutch Patent Act 11 and Article 72(3) of the Spanish Patent Law 12.
Where a patent right is jointly owned, no joint owner may assign or establish a right of pledge on the said joint owner’s own share without the consent of all the other joint owners.
Where a patent right is jointly owned, unless otherwise agreed upon by contract, each of the joint owners of the patent right may work the patented invention without the consent of the other joint owners.
Where a patent right is jointly owned, no joint owner may grant an exclusive license or non-exclusive license with regard to the patent right to any third party without the consent of all the other joint owners.
Article 99(2), (3) and (4) of the Korean law, which was in part modeled on the Japanese law, contains the same language. It should be noted that the provision in the first of these sub-clauses in each country goes beyond what is normal in many countries in limiting the co-owners right to dispose of his share without consent.
France and China differ from the above group of countries in that licensing by one co-owner is permitted, even if there is no agreement to that effect, but the proceeds of the license must be shared.
Where the co-owners of a patent application or patent have concluded an agreement on exercising of the right, the agreement shall apply. In the absence of such agreement, any co-owner may independently exploit the patent or license another party to exploit the patent through non-exclusive license; any fee for the exploitation obtained from licensing others to exploit the patent shall be distributed among the co-owners. Except for the circumstances as provided in the preceding paragraph, a jointly owned patent application or patent shall be exercised with the consent of all co-owners.
a) although co-owners may use the invention themselves, such use may be subject to making some recompense to other co-owners.
As noted above, neither Germany nor Canada has any specific legislation relating to rights of co-owners in patents.
Each part owner is authorized to use the joint object to the extent that joint use by other part owners is not impaired.
Since licensing of a patent by one co-owner can reduce the benefit of the patent to other co-owners, grant of such a license can have the effect of impairing the rights of other co-owners and so requires their consent. Section 745(2) however permits a court to intervene if refusal to grant such consent unreasonably affects the rights of all co-owners.
In Canada, the question is governed by common law. In Forget v. Specialty Tools of Canada Inc, Wood JA in the British Columbia Court of Appeal13 looked back to pre-1907 English case law to hold that any partial disposition of the rights of one co-owner, which included the granting of a license, had the effect of diluting the rights of the other co-owners because a greater number of persons would now be entitled to share in the benefits of the exclusive rights granted by the patent. Consequently consent of all other co-owners was needed before such dilution should be permitted.
As can be seen from the above, there is still substantial variety in the ways in which countries treat the rights of co-owners when they have not agreed to these among themselves in advance and detailed thinking about what is desired is important before entering into a joint ownership agreement.
This article first appeared in Offshore Investment, July/August 2014.
1 It seems that an “agreement to the contrary” need not be in writing and that this provision does not preempt state law claims for unjust enrichment in appropriate circumstances. Massachusetts Eye and Ear Infirmary v. QLT Phototherapeutics Inc. 75 USPQ2d 1225 *1st Cir. 2005). Another example of an agreement to the contrary is found in Wisconsin Alumni Research Foundation v. Xenon Pharma Inc., 93 USPQ2d 1361 (7th Cir 2010).
2 See for example Willingham v. Star Cutter Co., 194 USPQ 249 (6th Cir 1977).
3 Schering Corp v. Roussel-UCLAF SA, 104 F3d 341, 41 USPQ2d 1359 (Fed Cir 1997). See also Israel Bioengineering Project v. Amgen Inc., 81 USPQ2d 1558 (Fed. Cir. 2007).
that trumps the procedural rule for involuntary joinder under Rule 19(a).
5 Ethicon Inc v. United States Surgical Corp, 45 USPQ2d 1545 (Fed Cir. 1998). See, however, the strongly worded dissent to this view by Judge Newman who took the view that the law change on joint inventorship in 1984 had rendered older cases moot.
6 Enovsys LLC v. Nextel Communs. Inc., 614 F.3d 1333 (Fed. Cir. 2010)., although in that case, the effect of the community property right was negated by the terms of the couple’s divorce.
7 Pope Mfg Co. v. Gormully & Jeffrey Mfg. Co., 144 US 248 (1892).
8 Lucent Technologies Inc. v. Gateway Inc., 88 USPQ2d 1481 (Fed. Cir. 2008).
9 Patents Act Section 50.
10 Patents Act Section 51.
11 Which also specifically provides that a single co-owner can enforce the patent.
12 This section also specifically provides that a judge may authorize a single co-owner to grant a license for reasons of equity in particular circumstances. Article 72(2) permits a single co-owner to enforce the patent without consent of the other co-owners.

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