(Second Edition)

Kenneth L. Port,  Jay Dratler, Jr.,  Faye M. Hammersley, Esq.,  Terence P. McElwee,
Charles R. McManis, and Barbara A. Wrigley

On-Line Problem Supplement
Copyright © 2005   Carolina Academic Press.   For permission, see CMI.

Chapter 7

Problem 8:  Joint Ownership and Its Pitfalls

During negotiations, Assist and Contair contemplated that they would be working side-by-side on the bench to develop a significant and potentially lucrative variation on the voice-recognition technology.  As time passed, however, Assist discovered that Contair's engineers had little appetite for development, much less the expertise to do so.  Both parties funded development in equal amounts, but Assist provided all the development "sweat equity," and none of the Contair engineers are listed on the patent application as joint inventors.  The parties originally agreed to the following provisions:
    (a)  "Jointly Developed Products" shall mean products that are developed by both parties under the terms and conditions of this License Agreement.  The parties both acknowledge that the second-generation voice-recognition technology will be a Jointly Developed Product and shall be owned by both parties.
    (b)  Assist grants to Contair the right of first refusal during the term of this Agreement for the exclusive, worldwide, royalty-free right to sell, have sold, market, have marketed, distribute and have distributed all Jointly Developed Products.
Assist has come to you for advice.  It desperately wants out of the agreement.  Most important, one of Contair's competitors is hot on the heels of the development efforts of Assist, and Assist believes the competitor will be in the market before Assist and Contair with similar technology.  In addition, the second-generation voice-recognition technology contains a significant copyrightable portion.  Assist believes that the technology should belong exclusively to it.  After all, it developed all of the technology itself without any assistance from Contair.

Advise Assist with regard to the agreement it entered into, what the various ownership issues are, whether it could take action against Contair's competitor for infringement when the patent issues, and if anything can be done so that sole ownership of the technology will rest with Assist.

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