Joint ownership: Overview, definition and example
What is a joint ownership clause?
A joint ownership clause is a section in a contract that outlines how two or more parties will share ownership of something they create or develop together. It’s commonly used in agreements involving intellectual property (IP), such as inventions, designs, or creative works, where contributions from multiple parties lead to shared ownership.
For example, if two companies collaborate on developing a new product, the joint ownership clause defines who owns what, how the rights are divided, and how each party can use the shared property.
Why is a joint ownership clause important?
A joint ownership clause is important because it prevents disputes by clearly defining how ownership and rights are divided. Without it, disagreements can arise over how the jointly owned asset can be used, sold, or licensed. This clause also ensures that both parties understand their responsibilities, such as covering costs or maintaining the asset.
For businesses, a joint ownership clause provides transparency and fairness, protecting the interests of all contributors while fostering collaboration. It also defines how profits, royalties, or licensing fees will be shared, making it easier to manage future commercial opportunities.
Understanding a joint ownership clause through an example
Imagine a technology company and a university collaborate to develop a new AI algorithm. The joint ownership clause in their contract specifies that both parties have equal ownership of the algorithm. It also states that either party can license it to third parties, but any profits from licensing must be split 50/50.
In another scenario, two graphic designers co-create a logo for a client. Their joint ownership clause states that both designers have equal rights to use the logo in their portfolios, but neither can sell or license it without mutual consent.
An example of a joint ownership clause
Here’s how a joint ownership clause might look in a contract:
“The intellectual property developed under this Agreement shall be jointly owned by the Parties. Each Party shall have an equal, undivided interest in the intellectual property, with the right to use, license, and exploit it independently, subject to the obligations outlined in this Agreement. Any revenues generated from licensing or sales of the jointly owned intellectual property shall be shared equally between the Parties, unless otherwise agreed in writing.”
Conclusion
A joint ownership clause ensures fairness and clarity when two or more parties share ownership of a creation or asset. It defines how rights, responsibilities, and profits are divided, reducing the potential for conflicts and promoting smooth collaboration.
By including a clear joint ownership clause in contracts, businesses can protect their contributions, align expectations, and make it easier to capitalize on shared assets. It’s an essential tool for partnerships where intellectual property or co-developed resources are at stake.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.