When a patent isn’t enough

EU projects often present inventories of patents that participants individually hold entering the project. A Consortium Agreement regulates the rights and obligations among the partners and is signed at an early stage. With no details regulated among the partners and with the overall goal to reach market impact with the techniques being developed within the project, the risk for legal disputes is potential.

– Patent bureaus deal with patents and freedom to operate for individual companies. That doesn’t cover what you will be facing when taking the opportunity to collaborate with other companies to develop tomorrow’s techniques, says Magnus Andersson, Partner and Head of Business Development, IMCG, and with experience from countless EU projects.

Collaboration fuels the innovation

Focus for many EU projects is to through fruitful cooperation, generate new learnings and develop techniques that in the end will reach market impact. The outcome of the work differs from the techniques brought into the project by the companies individually.

Characteristic for an EU-project that focuses on innovation is that the outcome of the collaborative work differs from the techniques brought into the project by the companies individually.

Often, large, global companies offer their facilities so that the more fast-moving, but less capital-strong, SMEs can test their techniques at large scale for a relative long period of time. This is positive for the SME, as investors tend to perceive it as a strength that a well-known global giant is willing to test and contribute to the development of a new technique.

A Consortium Agreement is not sufficient

In EU project, all partners sign a Consortium Agreement (CA). It is a contract regulating the rights and obligations among the project partners regarding management structures and financial distribution but also concerning confidentiality, liability and Intellectual Property Rights (IPR). The CA is usually signed in the beginning of a project. The contract is often written in very broad terms, so that all partners can agree upon it within a fairly limited amount of time span.

When an innovative collaborative project starts to show results that can be commercialized, a general agreement is not enough. Documents must have been signed earlier clearly declaring which partner owns the outcome of the fruitful cooperation.

Clarify who has the exploitation right

The overall aim of an innovative Horizon 2020 project is to push innovative ideas all the way to the market. But when the EU project starts to show results that can be commercialized, it is important to understand that a CA is not enough. There is an enormous risk that it won’t be clear what partner owns the outcome. A common scenario in EU projects is that small companies with no legal expertise collaborate with global giants that have a whole department dedicated to legal issues. These two partners will end up fighting about who has the exploitation right. Who do you think will win if there is no legal document regulating this?

-IMCG works strategically with IPR management in several EU projects to encourage partners not only to rely on the Consortium Agreement, but to sign legal documents regulating details minimizing the risk for legal disputes and maximizing the possibility for the invention to reach market impact, says Ulrika Wahlström, Innovation Project Manager, IMCG.

A Non-Disclosure Agreement (NDA) can be used to regulate details. It’s a legal contract between at least two parties outlining confidential information. It creates a relationship between the parties to protect for instance proprietary information. If intellectual property (IP) issues are solved with clarity early on in the project, potential future conflicts are avoided. Business angels, investors and financial institutions are the ones who can enable that the invention reaches the market,  and they won’t invest in your innovation if you might own it. They will want proof of that it yours.