You’ve heard the phrase “two heads are better than one”. This can apply to Maine-based businesses and their intellectual property. When two or more companies agree to share their intellectual property so they both benefit, the payback can be considerable. Collaboration can result in increased revenue, and also the development of more intellectual property that can further benefit all the businesses involved.
This can be a very exciting time for a small business. However, a small business owner should be mindful of what can go wrong. There can be tremendous pressure to begin sharing intellectual property right away, especially if the advantages of doing so have a material impact on your company’s financial performance. But sharing with a third party is inherently risky. Theft or unauthorized use of the property needs to be a major concern.
Filler & Associates has compiled some steps your company can take to reduce the risks involved with sharing intellectual property:
Ask yourself if sharing really makes sense.Partnering with the right company can provide tremendous benefits. But take the time to consider whether your company could attain those benefits independently. Maybe the strategic partner is going to share intellectual property that your company is unable or unwilling to create on its own. Or it might be possible to license the intellectual property from the partner without being required to share your intellectual property in return.
Get legal counsel early in the process. You want to get a solid legal contract, agreed on by both parties, as a first step to collaboration. The agreement should include:
- Exact descriptions of the intellectual property to be shared.
- How the intellectual property will be identified by both parties. For example, all paper documents as well as electronic files will contain a watermark noting that the information is a trade secret as well as being confidential.
- The process for exchanging and storing the data.
- Within each organization, who will have access to the data? Are there circumstances where such access would be revoked?
- Will your company’s intellectual property be shared with your partner’s vendors, and vice-versa? If so, under what circumstances?
- If the partnership results in new intellectual property, how will ownership rights be assigned? Furthermore, who will have the ability to license or assign the newly created intellectual property?
How will the partnership affect your daily operations? A successful sharing arrangement will depend on each company investing in people, processes and technology. This can result in a lot of time, effort and expense. Before the collaboration begins, take the time to assess how this effort might negatively impact the company and what steps you can take today to avoid such disruption.
Ensure that incentives are aligned. It seems obvious, but before any agreement is signed, both parties should meet and be sure their expectations and goals are clear. This phase is exceptionally important as it allows both companies to discern the other’s true intent. Also, business owners should look into the other party’s previous collaboration attempts. Do they have a track record of successful collaboration or acrimonious litigation with prior partners?
Educate employees involved. Employees involved in the exchange of intellectual property should receive training on what information they can share, and with whom they can share it, both internally and at the partner company.
Determine what happens if an employee steals the intellectual property. The risk of an employee theft taking place is far greater when your company shares its intellectual property with another entity because the typical checks and balances may not be in place to protect assets not owned by the company. In the event that theft results, your company must be prepared to respond.
Monitor market developments and patent filings. Despite the best efforts of both parties to create value together, intellectual property shared during the collaboration may end up being used to create a new product or service without approval. As soon as the collaboration begins, someone with your organization should be tasked with monitoring new product/service launches within your company’s sector.
Determine when it is time to say goodbye. Small business owners must figure out in advance how to gracefully exit their intellectual property agreements. They must determine how intellectual property in the possession of the other party will be returned, and how the opposite party will show that all of the intellectual property it had in its possession belonging the other company is returned.
Of course, even when following all these steps, there are no guarantees that you won’t end up in court. Talk with Filler & Associates about how to make sure your small business is ready to enter an intellectual property agreement.