Joint Ownership Of Intellectual Property In New Zealand: Who Controls Its Use?

Intellectual property (IP) doesn't always belong to one person or business. Sometimes, two or more parties share ownership of something valuable, whether that's software, an invention, a product design or a brand.

Sharing ownership might seem straightforward, particularly where both parties have contributed to developing the IP. However, owning something together doesn't necessarily mean each owner has the same freedom to use, license or sell it.

What happens if one owner wants to pursue a new commercial opportunity? Can the other stop them? And what happens to the IP if they decide to go their separate ways?

Under New Zealand law, the answers depend on the type of intellectual property involved and any agreements between its owners.

In this article, we'll look at how joint IP ownership works, what rights co-owners have and what businesses should consider when managing shared intellectual property.

Can Two People Or Businesses Jointly Own Intellectual Property?

Yes, two or more individuals or businesses can legally own the same intellectual property. This is generally known as joint ownership or co-ownership.

Joint ownership can arise through the creation of IP, an agreement between the parties or a transfer of existing ownership rights.

However, working together doesn't automatically mean everyone involved owns the resulting IP equally.

For example, under New Zealand's Copyright Act 1994, joint authorship can arise where two or more people collaborate on a work and their contributions aren't distinct from one another. Where their contributions are separate, the ownership position may be different.

Businesses can also acquire joint copyright ownership through appropriate assignments, even if they weren't the original creators. Employment arrangements and existing contracts can affect ownership too.

There's another distinction worth understanding. If two founders each own 50% of a company, that doesn't necessarily mean they personally own half of its IP. The company may own the intellectual property itself, while the founders hold shares in the business.

Some IP, such as copyright, generally receives automatic legal protection when the relevant requirements are met. Other rights, including patents and registered designs, require registration to obtain their respective statutory protections.

Before entering into a joint ownership arrangement, it's important to establish exactly which rights are being shared and who legally owns them.

What Rights Do Joint IP Owners Have Under New Zealand Law?

One of the more important things to understand is that New Zealand law doesn't apply the same co-ownership rules to every type of intellectual property.

This means jointly owning copyright in software doesn't necessarily give you the same rights as jointly owning a patent or registered trade mark.

Copyright

Under the Copyright Act 1994, copyright can be jointly owned where the relevant legal requirements are met.

Where copyright is jointly owned, one owner generally cannot independently authorise a third party to reproduce, distribute or otherwise carry out restricted acts involving the jointly owned work without the necessary consent, unless an agreement or another legal basis permits it.

This can be particularly relevant to software, written content and other creative materials.

Patents

Joint patent ownership operates differently.

Under section 24 of the Patents Act 2013, joint patent owners generally hold equal, undivided shares unless they've agreed otherwise.

Each owner can ordinarily exercise the patent rights for their own benefit without having to account to the others.

However, granting a patent licence or assigning an ownership interest generally requires the other owners' consent, subject to any agreement and applicable statutory provisions.

This distinction can be important where two businesses want to commercialise the same invention in different ways.

Trade Marks

Under section 11 of the Trade Marks Act 2002, the rights of joint registered trade mark owners are exercised as though they belong to a single person.

This means businesses shouldn't assume that sharing ownership of a registered trade mark gives each owner unrestricted authority to license the brand or authorise another business to use it.

Any existing agreements and the statutory requirements need to be considered when determining what each owner can do.

Registered Designs

Registered designs are governed by the Designs Act 1953, which recognises that multiple parties can hold ownership interests in the same registered design.

However, the rights and requirements applying to registered designs aren't necessarily identical to those governing patents or trade marks.

Where a design is jointly owned, the parties need to consider their registered interests, any existing agreements and the applicable legal requirements before licensing or transferring rights.

Why Does This Matter In Practice?

Say two businesses jointly own a patented invention they've developed together.

One wants to manufacture and sell products using the invention through its existing business. The other wants to license the patent to an unrelated manufacturer.

Although both businesses own the patent, those activities are treated differently under New Zealand law.

A joint owner may generally exploit the patented invention independently, but licensing it to the third-party manufacturer ordinarily requires the other owner's consent.

This is why establishing ownership is only the first step. Understanding what each owner can legally do with the IP is equally important.

Can One Joint Owner License Or Sell Their Share Of The IP?

There's a difference between using intellectual property yourself, allowing another business to use it and transferring ownership rights altogether.

An IP Licence Agreement allows another party to use IP under agreed conditions while ownership remains with the existing owner or owners. An assignment transfers ownership rights instead.

For joint owners, these transactions can involve different consent requirements.

This matters when an opportunity arises to commercialise the IP. Even where one owner supports a proposed licensing deal, they may not be legally entitled to proceed without obtaining the necessary approval.

The financial arrangements can also be less straightforward than they initially appear.

Does Equal Ownership Mean Equal Profits?

Not necessarily.

Under New Zealand patent law, joint owners can generally exploit a patented invention for their own benefit without accounting to the other owners, unless they've agreed otherwise.

This means two businesses could hold equal shares in a patent but generate different amounts of income from their respective activities.

Revenue from licensing arrangements may raise separate questions, particularly where the parties intend to share royalties or other commercial returns.

If both owners expect to benefit financially from the IP, it's important to establish how that income will be allocated rather than assuming ownership percentages determine the outcome.

What Happens If Joint IP Owners Disagree?

Even where two businesses have worked together successfully, they won't necessarily agree on every decision involving their intellectual property.

One might want to license the IP more widely, while the other prefers to keep it exclusive to their existing business. They could also disagree about protecting the IP or investing in its further development.

The legal position depends on whether the decision falls within an owner's independent rights or requires approval from the other owners.

For example, one joint patent owner generally cannot prevent another from exercising their permitted independent-use rights simply because they disagree with how the invention is being commercialised.

However, where a proposed transaction requires consent, a disagreement may prevent it from proceeding.

For certain patent co-ownership issues, section 26 of the Patents Act 2013 allows the Commissioner of Patents to give directions concerning matters such as licensing, selling an interest or exercising patent rights.

This provides a potential mechanism for addressing particular disputes, but it isn't a general solution for every disagreement involving jointly owned IP.

For businesses, the practical difficulty is often working out who has authority to make decisions and what should happen when agreement can't be reached.

What Happens If One Joint IP Owner Wants To Leave?

Ending a business relationship doesn't automatically end joint ownership of the intellectual property developed during that relationship.

Two businesses might stop collaborating on a product but continue to hold rights in its underlying software, invention or design.

One might want to continue using the IP, while the other prefers to sell its interest or negotiate a buyout.

Whether either owner can do so depends on the rights involved and any existing agreements.

For example, a joint patent owner generally needs the other owners' consent to assign their share, unless an agreement or relevant statutory direction permits otherwise.

Where an ownership transfer is agreed, an IP Assignment Deed can help document the rights being transferred, subject to the applicable legal requirements.

Existing licences also deserve attention. If third parties already have permission to use the IP, ending the business relationship won't necessarily terminate those arrangements.

These questions can become particularly important when seeking investment or selling a business. A prospective buyer or investor may want certainty about whether the business owns the IP it relies on or shares ownership with another party.

What Should A Joint IP Ownership Agreement Cover?

Although New Zealand law provides certain default rules for jointly owned intellectual property, those rules won't necessarily reflect how the parties want their commercial relationship to operate.

A written agreement can establish what each party owns, what they're permitted to do independently and which decisions require joint approval.

It should also address how income from the IP will be shared and who will be responsible for protecting and maintaining it. This can include registration renewals, enforcement decisions and the costs associated with protecting the parties' rights.

Future developments are another consideration. If one business independently creates improvements to jointly owned software or technology, those improvements won't necessarily become jointly owned automatically. Ownership will depend on the rights involved, how the new material was developed and any existing contractual arrangements.

Finally, the agreement should establish how disagreements and exits will be handled, including whether one owner can buy out another and what happens to existing commercial rights.

Is Joint Ownership Always The Best Option?

Not necessarily.

In some circumstances, having one business own the IP while another receives a licence to use it can make commercial decision-making more straightforward.

Alternatively, the parties might establish a company to hold the IP, with each founder or participating business owning shares in that company.

Neither arrangement is automatically better. The most suitable structure depends on how the IP will be used, who needs control over it and the parties' longer-term plans.

Need Help With Jointly Owned Intellectual Property?

Joint ownership can work well, but it's important to understand what each owner can do with the IP and how important commercial decisions will be made.

Whether you're considering a new arrangement or reviewing existing ownership rights, having clear terms around use, licensing and transfers can help reduce uncertainty as your business develops.

If you'd like help with this, get in touch at team@sprintlaw.co.nz for a free, no-obligations chat.