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Author: Subject: Licensing, IP and ownership
tegwin

posted on 15/11/17 at 09:22 PM Reply With Quote
Licensing, IP and ownership

I have another obscure question for the clever folk here...


Lets assume you run a manufacturing company....... You are approached by Widget INC and asked to manufacture their product under license for X years.


Their designs are great but the product isn't quite at the level of quality you want and the design needs refining for mass production.

You make significant changes to the design initially and throughout the life of the license agreement so that you can make a good revenue stream from the products.


At the end of the license term Widget Inc decide that you make the manufacturing process look so easy they want to do it in house so they don't renew the license... Who owns the IP for the highly modified design, tooling, documentation, processes etc?





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stevebubs

posted on 15/11/17 at 09:28 PM Reply With Quote
Short answer... whatever your contract says...

...if you've fed the design changes back without a contract that secures the ownership then I don't think you're in a good position and it could be expensive to litigate..

[Edited on 15/11/17 by stevebubs]

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r1_pete

posted on 15/11/17 at 09:35 PM Reply With Quote
Had a similar issue just before I left work,

We had to show we had re developed the code, that no source programs had the same name as the originals, and the product itself was under a different name, AND had been from the point of re-development.

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tegwin

posted on 15/11/17 at 09:39 PM Reply With Quote
I am asking this as I consider going into such an agreement so am hoping advice here can help me ask the right questions.

Its more the appearance of the product.... Lets say that Widget INC invented the wheelbarrow... so the license allows me to manufacture something that looks like a wheelbarrow... None of the components will be the same as the ones they drew but its still a wheelbarrow...





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coyoteboy

posted on 15/11/17 at 10:02 PM Reply With Quote
I don't see how you can claim any ownership if you take someone elses idea and do some fixes. Whatever it is, get it in writing explicitly.





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bi22le

posted on 16/11/17 at 12:09 AM Reply With Quote
I work for a global medical device company and some times we choose to export manufacturing processes for various reasons.

I guess you could say I am on the other side of the fence.

Due to the value of our name we enter into these agreements with very explicit terms. Normally our products do not change it at all. We work closely with the external company to optimise design to their capabilities and techniques to prevent retrospective tweaking but if they approached us with an optimisation, we still own all rights.

Be careful bringing out a better"wheelbarrow" even if it has no common parts, they may have IP protected the wheelbarrow design.

If they want you to make something that costs slot to make, then charge them!

[Edited on 16/11/17 by bi22le]





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WallerZero

posted on 16/11/17 at 09:02 AM Reply With Quote
Sounds like something that needs to be worked out prior to signing and explicitly referenced in the contract. I.e. who owns what. If you are paying a license fee for their IP, then you need a sub section regarding developments, tooling, documentation, methods etc etc. That all comes into the contract. I'm sure they will have a clause that should the licence end, you have no grounds to produce anything even similar for X years or whatever.

I think you kinda answered your own question with calling it "highly modified" from their IP. Theres patents in the car industry for technology or ideas that aren't even designed yet. You're taking someones ideas and changing it but still its their fundamental idea. Unless they agree you own those changes, its more likely that they'll own whatever changes you make or take you through the courts if you sell essentially a mk2 version.

As said, don't leave it a grey area, discuss it. They won't want screwing over and you don't want a court case. Hash out those questions about life after the agreement and who owns what.





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Dick Axtell

posted on 16/11/17 at 09:56 AM Reply With Quote
U2U sent. Speak to a CPA, for professional advice.





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nick205

posted on 16/11/17 at 05:14 PM Reply With Quote
My employer and customer have "discussions" over IP ownership, usually under the terms of a written mutual Non-Disclosure Agreement. In some cases we enter into written contracts with customers, but more often than not an initial discussion clears the air and allows progress. Written contracts are viewed as a "last resort" and only used when necessary and/or to avoid possible argument/confusion.

Do you have a written agreement in place for this?

If so that's the first place to look and I'm sure the first place any legal bod would look.

From experience I'm also aware that getting into a "legal" (represented) discussion is usually time consuming and always expensive - be careful!

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ravingfool

posted on 16/11/17 at 05:55 PM Reply With Quote
quote:
Originally posted by nick205
My employer and customer have "discussions" over IP ownership, usually under the terms of a written mutual Non-Disclosure Agreement. In some cases we enter into written contracts with customers, but more often than not an initial discussion clears the air and allows progress. Written contracts are viewed as a "last resort" and only used when necessary and/or to avoid possible argument/confusion.

Do you have a written agreement in place for this?

If so that's the first place to look and I'm sure the first place any legal bod would look.

From experience I'm also aware that getting into a "legal" (represented) discussion is usually time consuming and always expensive - be careful!




The other side of that viewpoint is that spending money on advice and representation early on in a transaction helps avoid problems and limit costs later on.

Solicitors are like condoms. Best used as prevention and nowhere near as effective after you've already blown your load.

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nick205

posted on 17/11/17 at 08:14 AM Reply With Quote
quote:
Originally posted by ravingfool
quote:
Originally posted by nick205
My employer and customer have "discussions" over IP ownership, usually under the terms of a written mutual Non-Disclosure Agreement. In some cases we enter into written contracts with customers, but more often than not an initial discussion clears the air and allows progress. Written contracts are viewed as a "last resort" and only used when necessary and/or to avoid possible argument/confusion.

Do you have a written agreement in place for this?

If so that's the first place to look and I'm sure the first place any legal bod would look.

From experience I'm also aware that getting into a "legal" (represented) discussion is usually time consuming and always expensive - be careful!




The other side of that viewpoint is that spending money on advice and representation early on in a transaction helps avoid problems and limit costs later on.

Solicitors are like condoms. Best used as prevention and nowhere near as effective after you've already blown your load.



I understand your point (and rather nifty analogy). I suppose mine was from a business point of view that it's preferable if you can to avoid such costs all together. Solicitors are there to make a living (like the rest of us) and I'm not a fan pouring money into their pockets if it can be avoided.

Granted that's not always the case though. If there's a lot of revenue at stake for either (or both) sides then the argument may be more necessary.

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