Ownership Preferences of IP Rights in Tech Transactions and Disadvantages of Joint Venture Model
According to a business-wise approach, the protection provided with the related IP rights and the proper setting to be established which will ensure the best practice of the rights appear as important issues regarding the desired value of the business. Hence, the ownership preferences will be examined to portray the structure of IP rights in such transactions.
The structural models regarding the ownership and use of intellectual property rights can appear as; (i) Vertical Ownership, (ii) Collaborative Relationship and (iii) Joint Ownership. Vertical ownership creates a relationship contrary to what collaborative relationship structure offers. The former constitutes a “straightforward” ownership regarding the intellectual property. Even though the parties could agree that the licensee possess all of the new IP rights depending on the license, the parties can also agree that the license is returned to the licensor. Nevertheless, both of the options form a layout that disables a collaborative structure. Second model is collaborative relationship, which can be introduced as the opposite version of vertical relationship. When collaborative relationship is adopted, the structure can be created in three different forms. The parties may agree to establish a joint venture to possess the related IP rights, so that the management of the rights is left to the discretion of the designated body of the established entity. The said venture then concludes agreements with proper parties in order to manage the structure. Another option is to leave the possession of the IP rights solely to one party. The last option regarding collaborative relationship is more of a hybrid option appearing as the mixture of the first two structure forms. Accordingly, IP rights can be separately specified and exposed to the ownership of different parties in conformity with the existing texture of the parties. Moreover, the last structural model that the parties of transaction may follow is introduced as joint venture. Joint ventures can be established through applicable laws or through the agreements to be concluded by the parties. The most outstanding feature of joint ventures is that the interests of the contributors constitutes an “inseparable or interdependent” whole in terms of patents and copyrights. This can also be asserted as a disadvantage encountered when establishment of a joint venture is followed.
Joint venture is a business model that two or more parties agree to establish by providing resources in order to accomplish a common objective. Although this modeling preference may seem as a proper option for certain business areas, when technology transactions are in question, joint ventures are not qualified as the proper option when compared to aforementioned structuring options. Since, technology transactions provide for a business environment in which IP rights are deemed inevitable, multiple ownership over such rights embodies possible handicaps by means of management of the rights and related procedures. Mostly, multiple ownership may lead to decision making complications. Therefore, the practice of these rights and the result desired to be maintained with the protection provided by the said rights become functionless.
HERDEM Attorneys at Law