When a partnership dissolves, determining who retains intellectual property rights can become a complex issue.
Intellectual property often includes valuable assets such as trademarks, copyrights, patents and trade secrets. Resolving ownership disputes requires a careful look at agreements and the circumstances leading up to dissolution.
Review partnership agreements
The first step in resolving IP ownership disputes involves reviewing any partnership agreements. Many partnerships outline specific terms regarding intellectual property ownership in their operating agreements. These documents may specify whether the IP belongs to one partner, to the partnership as a whole or to individual partners. Clear agreements can make it easier to determine ownership.
Determine the creator of the intellectual property
California law often recognizes the creator of intellectual property as its initial owner unless a contract states otherwise. For example, if one partner independently developed a trademark or copyrighted material before the partnership began, they may retain rights to that IP. Similarly, a partner who created IP during the partnership may argue for ownership. Exceptions may exist if there is an agreement transferring rights to the partnership.
Evaluate contributions and use
A court may evaluate each partner’s contributions and the use of the intellectual property during the partnership. If both partners contributed to the creation or development of the IP, the rights may belong to the partnership rather than an individual. In this case, the partners may need to negotiate a division of the rights or consider selling the IP and splitting the proceeds.
Consider trade secrets and confidentiality
Trade secrets, including proprietary business methods or formulas, can further complicate disputes. California law protects trade secrets, but partners must take steps to maintain confidentiality. A partner who discloses or uses trade secrets without authorization after dissolution may face legal consequences.
Seek resolution through negotiation or court
Partners can often avoid costly disputes by negotiating an agreement regarding intellectual property. Mediation and other alternative dispute resolution methods may be more effective in some situations. Ifall discussions fail, the court may decide ownership based on evidence and the intent of the partners during the partnership’s formation.
Each partner has the right to protect their assets when a dissolution occurs. That is why it is important to understand how California law treats intellectual property rights. This understanding can lead to a fair resolution when a partnership ends.