What are the implications of the joint ownership of a patent?
Unless the joint owners of a patent agree otherwise, the law provides they have equal shares in the patent and can exploit it for their own benefit without accounting to each other. However, 1 owner cannot grant a licence under the patent, or assign an interest in it, without the consent of the other owner.
Now let's consider the case of 2 joint owners who collaborated on a project and expected their relationship, because it was based on joint ownership, to be joint, mutual, and with equal benefits.
They either:
- had no agreement governing their joint ownership rights, or
- had an agreement, but were silent on their respective joint ownership rights.
That being the case, the law will step in to provide a default position on 3 critical questions:
| 1 | Can a joint owner of a patent exploit the patent without the consent of the other joint owner, and without accounting to the other joint owner for any of the profits from doing so? | Yes |
| 2 | Can a joint owner of a patent assign its interest in the patent without the consent of the other joint owner? | No |
| 3 | Can a joint owner of a patent grant a licence of the patent without the consent of the other joint owner? | No |
One joint owner is a large company ('L') with manufacturing, marketing and selling capability.
The other joint owner has a small family company ('S') without that manufacturing, marketing and selling capability.
They can both exploit the patent and retain the profits, without accounting to the other for those profits.
L has the capability to do so, but S does not.
S asks L for permission for S to grant a licence to another person, but because that would result in L having a competitor to contend with, L declines.
S and L expected their joint ownership relationship to be one of joint and mutual equal benefits.
But practically, L has all the benefits of ownership, and S has none.
The lesson is that it is not desirable to be silent on these issues of exploitation, assignment and licensing, but rather, to specifically address them, and for a joint ownership agreement to regulate in an agreed manner the respective rights of the joint owners in relation to these 3 critical questions.