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
(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
(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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