Using intellectual property for collaboration

Intellectual property can help start-ups and technology companies collaborate without giving away control of their most valuable ideas.

By protecting key inventions, documenting ownership and agreeing on confidentiality and permitted use, businesses can share knowledge, work with outside experts and develop new products with less risks and greater confidence.

Patents, trade marks, designs, copyright and trade secrets can all support funding conversations when they are properly identified, owned and aligned with the startup’s business strategy.

When each party understands what it owns, what it is contributing and what it may do with the results, there is less need for guarded conversations. Good IP arrangements can give collaborators the confidence to speak frankly, test ideas and build something neither party could have developed alone.

This article forms part of our broader guide to how intellectual property strategy drives business success including how IP can support partnerships, innovation, investment and long-term commercial value.

If you are new to intellectual property, our guide to the main types of intellectual property explains how patents, trade marks, registered designs, copyright and trade secrets can protect different parts of a business and the ideas brought into a collaboration

How intellectual property supports collaboration

Intellectual property is sometimes treated as a reason to keep everything secret. In practice, protecting your ideas properly can make it safer to share them.

As a result, “patent” has its origins in the idea of something being open or accessible. A founding principle of patent law is that, in exchange for a limited-time monopoly, the inventor tells the world how the invention works. A patent specification ultimately becomes available for public inspection and must disclose the invention clearly and completely enough for a person skilled in the relevant field to perform it.

In Australia, a standard patent application will generally become open to public inspection around 18 months after its earliest priority date. International applications filed through the Patent Cooperation Treaty are also normally published after approximately 18 months.

This disclosure is part of the bargain underpinning the patent system. The inventor explains the invention in exchange for the possibility of receiving time-limited exclusive rights. Other people can then study the published document, attempt to improve on it or develop a different solution.

That does not mean every idea should immediately be disclosed. Before an application is filed, secrecy can be critical. Public disclosure may affect the ability to obtain patent or design protection, particularly overseas. Although Australian patent law provides a 12-month grace period for certain disclosures, other countries may apply different rules. Relying on the Australian grace period can therefore compromise or complicate an international patent strategy.

Protect your IP before discussing a collaboration

Before approaching a developer, manufacturer, university, investor or commercial partner, identify what you are bringing to the table.

This is particularly important when working with manufacturers and other external parties that may gain detailed knowledge of your product, processes or improvements. Our guide to protecting intellectual property when working with suppliers and distributors explains these risks in more detail.

Some of these assets may be protected by patents, registered designs, trade marks or copyright. Others may need to be managed as confidential information or trade secrets.

Where sensitive information must be disclosed, a confidentiality agreement or non-disclosure agreement can reduce some of the risks that might otherwise prevent an open discussion. An NDA (non-disclosure agreement) defines what information is confidential, why it is being shared, who may access it and how it may be used.

However, an NDA is not a complete IP strategy. It cannot correct an unclear ownership position, replace a patent application or automatically prevent a collaborator from independently developing something similar.

Agree on intellectual property ownership before work starts

One of the biggest risks in collaboration is assuming that ownership will sort itself out later.

IP Australia recommends dealing with ownership before collaborative work begins because valuable rights may arise during the earliest stages of a project. A collaboration agreement should distinguish between:

Background IP

Background IP is the intellectual property each party already owns or controls before the project begins.

For example, a medical technology startup may contribute its existing sensor design, while a software company contributes its data-analysis platform. Each party may retain ownership of its background IP while granting the other party a limited licence to use it solely for the agreed project.

Project IP or newly created IP

Project IP, sometimes called foreground IP, is developed through the collaboration.

The parties should decide who will own inventions, software, designs, data, research results and other outputs. Ownership might sit with one party, be divided according to subject matter or, in some cases, be shared.

Joint ownership can sound fair, but it can create practical problems. The rules governing whether one owner can use, license or enforce jointly owned IP without the other owner’s consent vary between types of rights and countries. A clear allocation of ownership, supported by appropriate licences, is often easier to manage.

Improvements to existing technology

The agreement should also address improvements.

Imagine that a startup allows a manufacturer to use its patented production process. During testing, the manufacturer develops a faster version of that process. Is the improvement owned by the manufacturer, the startup or both? Can the manufacturer use it for other customers?

These questions are much easier to resolve before the improvement exists.

Contractors and developers may own what they create

Paying someone to create software, drawings, branding or a prototype does not necessarily mean your business owns all the resulting IP.

Similar ownership questions can arise with employees, consultants and other contributors, as explained in our guide to using intellectual property in human resources to protect and retain business value.

Australian government guidance states that a contractor will generally own the IP they create unless the contract provides otherwise. If the hiring business is intended to own it, the agreement should say so expressly.

For example, a startup may pay an outside developer to build the first version of its software platform. Without appropriate IP assignment or licensing provisions, the startup could later discover that it doesn’t fully own the code on which its business depends.

Use licensing to build bridges rather than walls

Collaboration does not always require one party to transfer ownership to another. A licence can allow a collaborator to use IP while the original owner retains it.

The licence may be exclusive or non-exclusive and can be limited by purpose, territory, industry, customer group or period of time.

For example, a materials company might license its technology to one partner for sensor devices while retaining the right to use the same technology in the construction of other hardware. A software startup might allow a research institution to use its platform for a particular study without granting broader commercial rights.

This is where IP moves beyond the traditional “sword and shield” model. Instead of using IP only to attack competitors or defend assets, businesses can use it to create sustainable cooperation, share risk and enter markets they could not reach alone.

WIPO identifies access to knowledge and technology, shared research and development costs, reduced risk and entry into new markets as potential benefits of IP-based business partnerships.

Open innovation still needs clear boundaries

No company has all the expertise or good ideas it may need under one umbrella. Start-ups and established companies increasingly work with universities, suppliers, specialist developers, research organisations and other innovators.

This approach is often called open or collaborative innovation. Deliberately decide what can be shared, with whom and on what terms, rather than giving ideas away.

For Australian businesses working with universities, IP Australia’s Higher Education Research Commercialisation IP Framework provides information and model agreements intended to make university-industry collaboration easier.

These arrangements are easier to manage when the business has clear internal responsibility for identifying, documenting and protecting IP. Our guide to intellectual property governance for startups and innovators explains how to build those processes into everyday decision-making.

Use intellectual property to collaborate with confidence

No IP position is ever completely watertight or unassailable. Attempting to resolve every commercial disagreement through litigation can also drain money, management attention and innovation resources.

A better approach is to use IP as a practical commercial tool. It can define each party’s contribution, support negotiations, establish boundaries and create opportunities to license or commercialise technology together.

The right framework allows businesses to exchange useful information without losing sight of what they own, what they need to retain and what value they expect from the relationship.

Frequently asked questions about IP collaboration

Useful intellectual property collaboration resources

For further reading, these useful IP Australia resources include:

Article Name and Description	Link
Commercialisation and Collaboration   Guidance on managing IP in commercial collaborations, including the Higher Education Research Commercialisation IP Framework and university–industry agreement templates	Commercialisation and Collaboration
IP management for collaborations   Practical guidance on background IP, project IP, third-party IP, ownership and reducing the risk of disputes	IP management for collaborations
Non-disclosure agreements   Explains when an NDA may be useful and provides access to IP Australia’s free NDA contract generator.	Non-disclosure agreements

Build an IP framework before you start collaborating

If you are unsure how intellectual property applies to a proposed collaboration, Patenteur can help you identify what you already own, what needs to be protected and what should be addressed before information or technology is shared.

A clear IP strategy can help you collaborate with confidence, preserve the value of your ideas and build a relationship that works for everyone involved