Monday, 31 January 2022

Business Prenups

Jan Josef Horemans, "The Marriage Contract"

Although it is the last thing on a couple's minds while they are in love every marriage or civil partnership comes to an end through death or divorce.  That can sometimes result in a messy and expensive legal tangle in the Family Division.  A good way to avoid that outcome is for the couple to agree on who owns what and what should happen to their assets on death or divorce in a prenuptial agreement.

The same is true when it comes to launching a business.   Very few individuals have all the skills and resources necessary to launch a new product or service so they look to others for help.  Some may be friends and relations.  Others consultants and contractors.  Even business angels or private equity investors.  When all goes well they work together on developing, funding or launching their business, product or service and never spare a thought as to what should happen if they fall out or their joint venture fails.   

When that happens there can be litigation over who owns a patent or patent application in the Intellectual Property Office known as "entitlement actions" which I described in Disputes Over Ownership of Inventions on 6 Aug 2015 in NIPC Southeast, unfair prejudice or insolvency proceedings in the Chancery Division. That can be even messier and more expensive than family litigation.

Just as a prenup is a good way of avoiding or mitigating the disputes that would otherwise arise when a marriage comes to an end a written agreement with collaborators, consultants, contractors or investors as to who is entitled to apply for or hold a patent could avoid an entitlement or other dispute.  There is already a set of useful precedents for collaborations between businesses and universities known as the "Lambert Toolkit" which I mentioned in IPO Consultation - Business to Business Collaboration Agreements on 23 July 2018 in NIPC Northwest.  These can be adapted to similar collaborations with other parties.    Simple shareholders' agreements that are to be found in all kinds of businesses can also help.

I can advise on and draft such agreements as can my colleagues Andrea Knox of Knox Commercial Solicitors, Sean Thomas of Thomas Harrison IP and Steve Livingston of IP Tax Solutions.  So too can others at the IP Bar,  in specialist IP or commercial law firms, the Chartered Institute of Patent Attorneys and a few other specialist accountancy practices.    Anyone wishing to discuss this topic may call me on 020 7404 5252 or send me a message through my contact form.

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