Alex is Sprintlaw's co-founder and a legal technology leader. He holds law and media degrees from the University of Sydney and has been recognized by Australasian Lawyer, Lawyers Weekly and the Sydney Young Entrepreneur Awards for his work building Sprintlaw and improving access to business legal support.
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Intellectual property (IP) can be one of a business's most valuable assets, and sometimes more than one person or company owns the same rights.
Two founders might jointly own software they've developed, or two businesses might share ownership of an invention, design or brand.
Sharing ownership sounds straightforward enough. But what does it actually allow each owner to do?
Can one owner license the IP to another business without asking permission? Do they have to share the profits? And what happens if the owners disagree or decide to go their separate ways?
Under US law, the answers aren't always what you'd expect. Joint ownership rights can differ significantly depending on whether you're dealing with copyright, patents, trademarks or other intellectual property.
In this article, we'll explain how joint IP ownership works, what rights co-owners generally have and what businesses should consider before making commercial decisions about shared IP.
Can Two People Or Businesses Jointly Own Intellectual Property?
Yes, two or more individuals or businesses can legally own the same intellectual property. This is known as joint ownership or co-ownership.
Joint ownership can arise in several ways. Two people might jointly create a copyright-protected work, multiple inventors might share rights in a patented invention, or businesses might acquire ownership interests through an agreement or assignment.
However, working on something together doesn't automatically make everyone a joint owner.
Under US copyright law, for example, a joint work generally involves two or more authors who intend their contributions to become inseparable or interdependent parts of one work. Simply contributing to the same project isn't necessarily enough.
Patent inventorship is determined under different legal rules, while employment arrangements, work-made-for-hire provisions and existing contracts can also affect who owns the resulting IP.
There's another distinction worth understanding. If two founders each own 50% of a company, they don't necessarily own half of its intellectual property personally. The company may own the IP itself, with the founders holding equity in the business instead.
Before considering what joint owners can do, it's important to establish who legally owns the IP and whether any agreements affect those rights.
What Rights Do Joint IP Owners Have Under US Law?
US law doesn't apply the same co-ownership rules to every type of intellectual property.
In particular, jointly owning copyright can create different rights and financial obligations from jointly owning a patent.
Copyright
Under section 201 of the US Copyright Act, the authors of a qualifying joint work are co-owners of its copyright.
Unless they've agreed otherwise, each copyright co-owner can generally use the work or grant a nonexclusive licence to another party without obtaining the other owners' permission.
However, they generally have a duty to account to their co-owners for the appropriate share of profits generated from exploiting or licensing the jointly owned work.
An individual owner also generally can't grant someone an exclusive licence covering the entire jointly owned copyright without the other owners' agreement.
These rules can be particularly relevant to jointly developed software, written content and creative materials.
Patents
Joint patent ownership works differently, particularly when it comes to commercial returns.
Under 35 U.S.C. § 262, each joint patent owner can generally make, use, offer to sell or sell the patented invention in the United States, or import it into the country, without the other owners' consent, unless they've agreed otherwise.
Joint patent owners can also generally grant nonexclusive licences independently.
Unlike copyright co-owners, they ordinarily don't have to share profits generated from independently exploiting or licensing the patent.
That means two businesses could own the same patent but benefit from it financially in very different ways.
Trademarks
Joint trademark ownership requires a different approach.
US trademark law is concerned with how a mark identifies the source of goods or services and how their nature and quality are controlled.
Although multiple parties can jointly own a trademark, there isn't one general federal rule giving every co-owner the same independent licensing rights available to patent owners.
The parties' agreements, how the mark is used and who exercises control over it all matter.
For example, licensing a trademark to another business generally requires appropriate quality control. Allowing a third party to use the mark without sufficient oversight can put the trademark rights at risk.
This is why sharing ownership of a brand requires more than simply agreeing on ownership percentages. The owners also need to consider how the brand will be used and managed.
Designs And Trade Secrets
In the US, ornamental designs can be protected through design patents, which are generally subject to federal patent ownership rules.
Trade secrets operate differently. Protection depends on the information remaining confidential and appropriate measures being taken to preserve its secrecy.
Where businesses share access to valuable confidential technology, business methods or other trade secrets, their contractual rights and confidentiality obligations are particularly important.
The legal arrangements should reflect the specific intellectual property involved rather than assuming the same co-ownership rules apply to every asset.
Can One Joint Owner License Or Sell IP Without Permission?
One of the most important distinctions in joint ownership is the difference between allowing someone else to use IP and transferring ownership of it.
An IP License gives another party permission to use intellectual property under agreed conditions while ownership remains with the existing owner or owners.
An assignment, on the other hand, transfers ownership rights.
The question is whether an individual co-owner has the authority to enter into either arrangement independently.
For example, a copyright co-owner can generally grant a nonexclusive licence without seeking approval, but cannot ordinarily grant an exclusive licence covering the entire jointly owned work alone.
For patents, a joint owner generally has broad independent rights to license the invention nonexclusively. They may also transfer their own ownership interest without the other owners' consent, unless an agreement restricts that right.
However, transferring an interest doesn't mean transferring the entire patent on behalf of the other owners.
Copyright assignments are subject to separate requirements, including the need for a signed writing under federal law. Trademark transfers also require consideration of the goodwill associated with the mark.
For businesses, these distinctions can affect whether a proposed commercial deal can proceed and exactly what rights can be offered to another party.
What Happens If Joint IP Owners Disagree?
Joint owners won't necessarily agree on every commercial decision.
One might want to license their technology to several businesses, while the other prefers to keep it exclusive. They might disagree about pricing, protecting the IP or whether to pursue a potential infringement.
Importantly, a disagreement doesn't automatically give one owner the right to prevent another from exercising their lawful independent rights.
For example, where a joint patent owner is entitled to license the invention nonexclusively, another owner generally can't stop that transaction simply because they disagree with it.
However, contractual restrictions may change what the owner is permitted to do.
Disagreements can also become more complicated when enforcing IP rights.
Under US patent law, all patent co-owners generally need to participate in an infringement lawsuit, subject to limited exceptions. If one owner refuses to join, that may prevent the other from proceeding with the claim.
This creates an interesting contrast: patent owners may have considerable freedom to commercialize an invention independently, but enforcing the patent against a third party can require cooperation.
Copyright and trademark enforcement involve different requirements, so businesses shouldn't assume one set of rules applies to every infringement issue.
Where important decisions require cooperation, having an agreed process for approvals and disagreements can help prevent commercial opportunities from becoming unnecessarily difficult to pursue.
What Happens If One Joint IP Owner Wants To Leave?
Ending a business relationship doesn't automatically end joint ownership of the intellectual property involved.
Two founders might decide to pursue separate ventures, or two companies might stop developing a product together while retaining rights in the underlying technology.
One may want to continue using the IP, while the other wants to sell their interest or obtain exclusive ownership.
What happens next depends on the type of IP, the parties' ownership interests and any applicable contractual restrictions.
For example, a joint patent owner may generally transfer their own interest, but the buyer would acquire that interest subject to the rights of the other owners. The seller cannot transfer ownership rights they don't hold.
If the parties want one business to become the sole owner, they may need to negotiate an appropriate transfer or buyout arrangement.
An IP Assignment Agreement can help document an agreed transfer, subject to the relevant legal formalities.
Existing licences also deserve attention. A collaboration ending doesn't automatically terminate rights that have already been granted to third parties.
These issues can become particularly important when a business is preparing to raise capital or be acquired. Investors and buyers may want certainty about whether the company controls the IP it relies on, particularly if individual founders or former business partners continue to hold ownership interests.
What Should A Joint IP Ownership Agreement Cover?
US law provides default rules for jointly owned intellectual property, but those rules won't necessarily reflect how the parties want their business relationship to operate.
For example, two patent owners might prefer to restrict independent licensing because they intend to commercialize the invention through one company. Copyright co-owners may want a clear method for calculating and distributing licensing revenue.
A written agreement can establish exactly what IP is jointly owned, which activities each party can undertake independently and which decisions require approval.
It should also address how commercial returns will be shared and who will be responsible for maintaining registrations or responding to potential infringement.
Future developments are another consideration. If one owner independently creates improvements to jointly owned technology, those improvements won't necessarily be jointly owned automatically. The position may depend on inventorship, copyright ownership, existing IP rights and contractual arrangements.
Finally, it's worth establishing how an owner can leave, whether the others have an option to purchase their interest and what happens to existing commercial rights.
Is Joint Ownership Always The Best Arrangement?
Not necessarily.
For some businesses, having the company own its essential intellectual property while the founders hold equity in the business may provide clearer control over commercial decisions.
In other circumstances, one party owning the IP and granting the other a licence to use it may be more practical.
The right arrangement depends on the type of IP, how it will be commercialized and the parties' longer-term plans.
Need Help With Jointly Owned Intellectual Property?
Joint ownership can work well, but understanding what each owner can do with the IP is an important part of protecting the business's commercial interests.
Whether you're developing technology with another company, sharing ownership of creative work or reviewing an existing arrangement, clear terms can help make future decisions easier to manage.
If you'd like help with this, contact us on (888) 449-8437 or team@sprintlaw.com to request a free quote.
Alex SoloCo-Founder
