Joint Ventures: International Considerations

It is becoming increasingly common for companies to combine forces in order to maximise business opportunities, particularly in the area of design and technology.  Rather than undertake every aspect of design, development and exploitation, a business may decide to contract out such activities, or to collaborate with another who has different skills or resources.  Such a collaboration may take the form of a joint venture and be between companies in different countries.

Despite the move towards international harmonisation of Intellectual Property Rights, the rules relating to the protection and enforcement of IPR is still primarily found in national laws.  On any international transaction, it is therefore necessary to consider local laws applicable to any relevant rights.

Most items of jewellery will qualify for copyright protection as works of artistic craftsmanship.  Most designs will therefore enjoy recognition in most other countries under the Berne Convention.  The Rights however are national and protected according to local law and legal procedure.

When entering a collaboration with a foreign business, it is common and prudent to form a Limited Liability Company for the purposes of the joint venture.  Such a company may be equally owned or owned according to whatever division of shares are agreed.

On formation of the joint venture, the key issue is to establish what IP Rights will be contributed to the venture by each of the joint venture parties, and at what time.

• Establish whether the IP Rights (e.g. copyright in the design and Trade Mark in the brand) which will be needed by the joint venture company are to be owned by you and/or the foreign partner or are they to be licensed?

• Consider whether there is a need for you to disclose any know-how to the other?  If so, ensure this is covered by confidentiality.

• Whether warranties or indemnities regarding such matters as ownership and non-infringement should be given; and

• Decide upon the value to be attributed to the IP Rights.

In such a joint venture, the valuation of the IP Rights is important, since these may form a key component of each party’s contribution to the joint venture, and may have an important impact on the ultimate balance of power between the joint venture parties.  It is important to give due consideration to these issues at the outset, so that upon instructing your solicitor to draft the Joint Venture Agreement, he or she has all the details needed. You do not want to waste time and money negotiating the drafting of what should be a non contentious document.

For more information please contact Stephen Welfare, Partner at Royds LLP Solicitors and specialist in Intellectual Property.