Managing IP and Sensitive Data Risks in Co-Development Arrangements

 Guiding Gershman Law, PLLC, as founder and partner, Dyan Gershman delivers legal counsel that meets the needs of international businesses maintaining or exploring US operations. One area in which Dyan Gershman regularly assists clients is forging business and commercial contracts in areas such as distribution, licensing, and co-development.

Also known as joint development agreements, co-development arrangements synergistically bring together two companies that each have technical competencies and/or financial resources that the other lacks. Together, they undertake the research and development of specific products and services that would be challenging to develop alone, with the aim of introducing them commercially.

In many cases, co-development agreements are undertaken between enterprises that are natural competitors. All too often, co-development is arranged with a default joint ownership arrangement in place, which becomes problematic when one of the companies moves to commercialize a project’s work without obtaining the co-owner’s consent (and often without sharing resulting revenue).

This potential pitfall makes it essential to negotiate the co-development agreement carefully, in ways that protect the intellectual property (IP) that each party brings to the table. Undertaken at the outset of a project, carefully drafted contracts safeguard against IP infringement and also provide control to specified parties for all aspects of IP disposition, such as licensing. In addition, they address areas of risk through confidentiality and nondisclosure agreements that are a prerequisite to sharing confidential data and trade secrets.

A well-crafted co-development agreement goes in-depth in defining which components of intellectual property used in complex joint undertakings are owned by which party, as well as ensuring that sensitive material are not shared beyond the strict shared parameters of the project.