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Legal: Joint development

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THE FINE PRINT
Joint development: covering all bases
 
Are you working with another company, consultant or research body to develop new or improved products or processes, or to create materials for use in your business? If so, here are ten issues you should consider.
 
  1. Clearly define the scope of work. Poorly defined scope of work or performance specifications lead to disappointed customers and frustrated suppliers, and can be the source of dispute, particularly in the software development context.
  2. Who is contributing what to the development? It is generally not difficult to define respective contributions in the case of tangible equipment, cash and property, but it can be more difficult in the case of background intellectual property rights or “in kind” contributions.
  3. Define milestones. Any substantial project will typically be broken down into a number of discreet stages, with targets or milestones to be achieved at the conclusion of each stage. Payments are often linked to the satisfactory achievement of milestones, so define what is meant by “satisfactory” completion of each milestone.
  4. Identify deliverables. What do you want to achieve? Whether the outcome is to be a report, widget, software or something else, identify the deliverable and the manner in which it is to be provided.
  5. Do you own the results of the development? You might assume that because you are paying the developer or researcher, you will automatically own the results of their work. In fact, in many cases intellectual property (IP) rights arising from the development will be owned by the developer unless there is a written agreement to the contrary. Consider what rights your developer has to use project outcomes with other clients.
  6. Beware of jointly-owned IP. If your project involves collaboration with others, it is possible that IP might be created that is jointly owned. Ideally, as customer you should seek ownership of any IP arising from development work. However sometimes this is not commercially achievable, and joint ownership is seen as a comprise solution. The laws in relation to jointly-owned IP vary according to the nature of the IP, and if IP will be jointly owned it is important to ensure that the respective rights and obligations of the joint owners in relation to the use and licensing of jointly owned IP, as well as protection and maintenance of the IP, are agreed and clearly defined.
  7. Are you free to use the results of the development? Your rights to use the project outcomes will depend on the terms of engagement. Do not assume that you will have complete freedom to use the results of your development or research project. The standard contract terms of some research institutions provide that the customer only has the right to negotiate a licence to use the results of the research project. This creates uncertainty for the customer as to the cost of accessing project results. Ensure that you negotiate the rights of access you need.
  8. Will the results of the development be kept confidential? Researchers publish or perish, and there is an inevitable tension between the desire of a customer to keep research project results confidential, and the desire of a researcher to publish those results. If a prohibition on publication is not commercially achievable, you might seek to delay publication of results to enable the patenting of inventions, or require that any commercially valuable or sensitive information be deleted from a proposed publication.
  9. What if the project outcomes do not meet your expectations? Ideally, as customer you should have time to assess and evaluate the project outcomes, and have the developer fix any defects or reprovide any services that did not comply with the agreed scope of work. For example, in the case of a software development, agree upfront on acceptance tests and procedures to be performed following delivery of the developed software.
  10. Document your agreement! It goes without saying that the best way to ensure that your development proceeds smoothly and achieves its aims is to have a contract that deals adequately with all the relevant issues. Properly documenting your development project will help avoid disputes and ultimately result in a better outcome for both you and your supplier.
 
Peter Hallett is a Director of Watermark Intellectual Property Lawyers and specialises in commercial IP. Contact Peter on (03) 9819 1664 or [email protected]. 
 
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