Whenever Working With Outsiders and Your Proprietary Technology, Don’t Forget About Technology Improvements

Whenever a business (or independent inventor) enters into any type of agreement concerning access to its proprietary, patented, patent pending, or trade secret technology, it is important that the agreement addresses potential improvements to your technology that may be created as a result of the association between the two parties.  These could be intended or unintended but are a realistic result of learning the details of your proprietary information.  Think about how often someone asks, what if you did this? Or, wouldn’t it be great if it could…?

Why is this so important?  Patent laws vest ownership of any invention in the inventor.  Thus, the other business could have claim to an improvement on your technology that could potentially be sold or licensed to your competitors.  To retain ownership of your technology’s improvements, you must have a written contract clause that gives you ownership of any improvements.  This will legally overcome the default provisions of patent law vesting ownership with the inventor.

What if the other party wants some benefit from any improvement it helps bring about?  You can do a license-back of the improvement for it to use the improved technology.  The terms can include agreements on financial matters and right to sell or license to third parties.  Often the licensee is royalty-free and is not transferrable – only the business can use it for its own purposes but can’t let others use it.

The agreement should also require the other company to have policies that all employees and consultants assign inventions to the employer so the company can make the necessary transfers to the underlying technology owner.  There should also be a notification clause requiring the other company to notify of any inventions and improvements, again, to allow the company to take the necessary action to protect and/or transfer ownership of such inventions.

These small steps will ensure you retain ownership of your critical proprietary assets.