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Joint Ownership of Patents- What rights does each owner have in exploiting the patent?

Joint Ownership of Patents- What rights does each owner have in exploiting the patent?. Martin Huenges huenges@maiwald.de. AIPLA IP Practice in Europe Committee, Feb. 1, 2006 - La Quinta, California. Article 59 EPC: Multiple Applicants.

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Joint Ownership of Patents- What rights does each owner have in exploiting the patent?

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  1. Joint Ownership of Patents- What rights does each owner have in exploiting the patent? Martin Huenges huenges@maiwald.de AIPLA IP Practice in Europe Committee, Feb. 1, 2006 - La Quinta, California

  2. Article 59 EPC: Multiple Applicants „A European patent application may also be filed either by joint applicants or by two or more applicants designating different Contracting States“ Two applicants can designate the same states or different states. Two applicants can also designate partly the same and partly different states. Multiple applicants can also result post hoc following the assignment of the European patent application for all or somecontracting states (contractual transfer, statutory succession in title, etc.), see Article 71 EPC. The legal relationship between the joint applicants is based on the national law which applies to them.

  3. Section 6 German Patent Act: Rights in the patent „If more than one person has made an invention, the rights in the patent will be shared by such persons jointly“ Relationship of joint applicants: Freedom of contract In the absence of any agreement: “Bruchteilsgemeinschaft”(community of part- owners), see Section 741 of the German Civil Code Under German law the effect of Joint Ownership is, in the absence of any agreement to the contrary, to create a legal entity sharing undivided interests in the patent - e.g. each party holds a nominal equal share, divided simply per head (Bruchteilsgemeinschaft).

  4. Main principles of a “Bruchteilsgemeinschaft” (community of part-owners) Each joint owner can assign his interest to a third party, this party will then replace the former joint owner with respect to the interest. Any dealing in the work is subject to consent. In the case of the insolvency of one joint owner, his interest can be transferred to creditors.

  5. Joint administration • The parties are entitled to joint administration • (Section 744 I German Civil Code). • • patent application and maintenance, • • grant of licences, • action against infringers, and • action against disclosure of secrets. • Proper administration can be decided by the majority of joint owners (Section 745 I German Civil Code)

  6. Maintenance of the patent • Measures necessary to maintain the patent can be taken by any party without obtaining the consent of the other(s) • (Section 744 II German Civil Code). • This includes • payment of annuities • filing an appeal against first instance refusal of the patent application • appointing a joint representative for service in grant proceedings if there is a danger of the application being refused due to the lack of such a representative. • The necessary, but refused, cooperation of one party can be replaced by judicial order.

  7. Infringement of the patent In the event of an infringement of a joint patent, each partycan file an infringementaction in his own name and claim damages on behalf of each party.

  8. Disposal of the patent Each party has power of disposal over his own sharewithout the concurrence of the others, (Section 747 I German Civil Code). The other parties are not entitled to a purchase option. On the whole dispositions can only be made with the agreement of all the parties (Section 747 II German Civil Code).

  9. Grant of licenses • The granting of licences requires the consent of all the parties, who can be obliged to give such consent as a result of • a majority decision (Section 745 I German Civil Code), or • a claim based on equitable discretion in the interest of all parties • (Section 745 II German Civil Code). • The grant of a licence by only one of the parties is not effective as against the others.

  10. Dissolution of joint ownership The parties can at any time demand the dissolution of the joint ownership. Dissolution shall take place by selling and dividing up the proceeds (Section 749 I German Civil Code).

  11. Use of the patent by the joint owners • Section 743 II German Civil Code: • Each party is entitled to the use of the jointly owned subject-matter to the extent that the other party is not affected. • Prevailing opinion in the literature: • Section 743 II does not state that this use should be free of charge. • Co-owners are entitled to compensation for the benefits the other party obtained from using the patent. • German Supreme Court Decision “Gummielastische Masse II”, 2005: • In the absence of any agreement, the use by individual parties in principle does not create an obligation towards the others to make compensation payments.

  12. Use of the patent by the joint owners German Supreme Court Decision “Gummielastische Masse II” • Use by one party means also using the share of the other party. • Section 743 II accords each party to use the jointly owned patent. • Section 745: • possibility of reaching a mutual agreement through a majority vote • claim for a corresponding use based on equitable discretion in the interest of all parties • In the absence of an agreement or a claim for an arrangement: •  every party is entitled to use the patent without obligation for compensation as long as use is not prejudicial to the actual use by the other party

  13. Joint ownership of a patent • Joint ownership without any arrangement as to the use is fraught with difficulties • Make a contract! • Use of the patent • Pursuing the application • Maintenance of the patent • Granting of licences

  14. Thank you for your attention …

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