What happens to IP rights in a partnership dispute?

There is nothing easy about dissolving a partnership in a business dispute.

And matters can quickly escalate when business partners begin to argue over their intellectual property. All types of intellectual property are important tools in the business world. They are what give many entities their edge in terms of competition. In turn, that is what makes them particularly contentious issues in any dispute.

Business owners must be prepared for what they could face in a partnership dispute over intellectual property.

Who owns it?

Ownership is the primary issue in any dispute involving intellectual property. Essentially, you must determine if:

  • You own the sole rights to the intellectual property
  • You and your partner jointly own the rights
  • The business owns the intellectual property

For example, say you developed a process or a secret recipe that you wish to capitalize on. So, you go into business with a partner and utilize this trade secret in your business operations.

It might seem clear to you that you own the trade secret, but ownership issues are often more complex than that. You often must obtain documentation that you own the trade secret and are simply allowing the business to use it. Making this distinction can be critical to protect your rights.

Without such documentation, a business partner might be able to argue that the business owns the intellectual property. This can make partnership disputes even more complicated.

Take protective steps in anticipation

California business owners and partners should address the ownership of intellectual property long before they ever face a dispute. For example, it is common for business partners to:

Discussing ownership and intellectual property can help business partners navigate disputes. But it is still important to note that even if business partners take these proactive measures, intellectual property rights can still pose a complex issue that requires great attention and care in the event of a dispute.