Intellectual Property Considerations in a Joint Venture.

Intellectual property in a collaborative work is significant, yet in #jointventures the subject takes the back seat in #Africa (especially in less complex projects) seeing that partners are often more concerned about profit sharing whilst overlooking the fact that IP can be a major source of revenue.

Joint Ventures do not exist "Ad Infinitum" - this implies that a contractual arrangement to jointly execute a project may likely come to an end as soon as the project is completed. Joint ventures could be as simple as an athletic team and a sports company partnering to create and market co-branded merchandise or it could be as complex as overseeing large-scale infrastructure projects, such as building highways, airports, or power plants as these ventures involve complex financing arrangements, risk-sharing mechanisms, government approvals, and long-term management contracts.

The necessity of regulating #IP ownership is less obscure in collaborative projects that involve IP sharing from parties, technology transfer, patents, technological know-how, ongoing research and development ex: pharmaceuticals and technology inclined ventures - while its importance could be a little overlooked in construction, real estate, oil exploration or any infrastructure development project.

Admittedly, a Joint Venture may take two forms:

Parties may decide to create an entirely new entity to take on the project - an example is Denza, an automobile company formed in 2010 by Daimler AG (currently Mercedes-Benz Group) and BYD, specifically to develop electric vehicles for the Chinese market. The collaboration combined Daimler’s expertise in automotive engineering with BYD’s battery technology (In September 2024, Mercedes-Benz withdrew from the joint venture by transferring its remaining stake to BYD).

Parties may also decide to be independent and have the terms of the joint venture governed by a written contract only - in 2011, Nokia and Microsoft entered into a contract-based agreement for the development and manufacturing of Windows Phone devices. The partnership focused on combining Nokia's hardware expertise with Microsoft’s software capabilities to create a series of smartphones, though it did not form a separate entity.

(Note that a contract regulating the joint venture is still necessary even with the formation of a new entity).

IP CONSIDERATIONS

Intellectual property is the real competitive advantage of companies in today’s economy.

— Michael A. Cusumano, Professor at MIT Sloan School of Management

• Identification: Every project has its unique key assets - including brand identifiers, designs or software - the first step is to identify them - for Oil Exploration, it could be drilling technologies, for fashion, it could be designs and patterns.
• Ownership - Defining IP that pre-exists the JV and who owns the IP created during the venture.
• Usage: Defines how each party can use the IP during the venture and after the collaboration ends, ensuring that proprietary knowledge is not misused.
• Commercialisation: Define how JV partners can monetarily benefit from joint innovation efforts and restrictions if any.
• Dispute Resolution: Outline how disputes relating to IP ownership and use will be addressed.
• Confidentiality: JV involves sharing sensitive information. IP agreements help protect trade secrets, ensuring that each party respects the other’s proprietary knowledge.

IP can be a significant source of #revenue through licensing, product development, franchising, or other commercialization strategies. Defining how IP is managed allows the JV to fully exploit these opportunities. Some transactions are simpler than others, nevertheless, clear IP arrangements are "must haves"- without this, the Joint Venture may miss out on potential income streams, or struggle with legal challenges that hinder commercialisation efforts.

A Seasoned Legal Professional (and senior consultant at Ht Legal Advisory, Lagos-Nigeria), I leverage my knowledge of Corporate Transactions, Dispute resolution, Regulatory Compliance, and Contract Management to deliver practical solutions that drive business success in established and emerging markets.