The Most Frequently Asked Questions For Research and Development
Research and development is a key component for innovation, which often includes collaboration between various different parties in order to be achieved.
Due to this, it is sometimes necessary to enter into a number of agreements, which depend on a multitude of factors including the stage at which the collaboration is taking place, as well as the nature of the different parties involved.
As you may have noticed already, the legal details surrounding research and development can seem daunting at first. Fear not, as our team of professionals are well versed in all areas of business law, including research and development.
Below is a breakdown of the most frequently asked questions about research and development, along with an accurate and up to date answer for each. Should you need an answer to a question that doesn’t appear here, you’re welcome to reach out to us – we’d be happy to help.
Research and Development Frequently Asked Questions
Do I need to enter into a confidentiality agreement or NDA before starting research and development?
Whilst it is not a legal requirement to do so, it is prudent to ensure that you enter into a confidentiality agreement or non-disclosure agreement (NDA) with any third party before disclosing sensitive business information to them. A confidentiality agreement, or NDA, will provide a means for early-stage discussion of a project and for the parties to exchange enough information to gauge the interest and compatibility of the other before fully committing to the project.
Ownership of intellectual property rights in the results of a research and development project will depend on whether there is any agreement or common intention between the parties as to who will own the same. In the event that there is no such agreement in place, the parties may end up in dispute over ownership and it will be for the courts to decide who owns any intellectual property rights. It is therefore important to deal with ownership as part of any research and development agreement.
‘Know-how’ is technical or practical knowledge that results from research and development and usually relates to the way something is done. Due to the fact that know-how is not always written down it can be difficult to define. This technical or practical knowledge can be recorded in any form or can even be held in the memory of its inventor or a key employee of the business using such know-how (which, can cause problems in itself). It can include operating manuals, designs, blueprints and other technical information.
Until recently, there was no statutory definition of ‘know-how’. However, following a change in law on 1 January 2021, there is now a statutory definition of know-how in UK law. At law, ‘“Know-how” means a package of practical information, resulting from experience and testing, which is: (i) secret, that is to say, not generally known or easily accessible, (ii) substantial, that is to say, significant and useful for the production of the contract products, and (iii) identified, that is to say, described in a sufficiently comprehensive manner so as to make it possible to verify that it fulfils the criteria of secrecy and substantiality.’ (Article 1 of Retained Regulation (EU) 316/2014).
Intellectual property refers to ‘creations of the mind’ and covers everything from literary works and works of art to inventions, designs, brand names and business images/logos. Intellectual property rights may be registered or unregistered, depending on their nature; these rights protect works created by you and your business. If sufficiently protected, you may have the right to sue if a third party uses your intellectual property without your consent as well as the right to profit from the commercialisation of those inventions and creations.
There are four main types of intellectual property that can be protected:
- business names and symbols/logos (known as trademarks);
- inventions (such as new products, processes and, for example, results created as part of a research and development project);
- decorative designs and designs for the appearance or shape of a product;
- original written publications, recordings and other material (including works of art, photos and other images; websites and their content; plans and blueprints; catalogues, promotional materials and formats and layouts of written works).
In some cases, protection is afforded to you automatically and this is generally in respect of copyrighted works, such as works of art, written works and composed or arranged music. Other forms of protection, such as trademarks for business names and logos or patents for new inventions, will require an application to be made for the maximum protection available and there will be registration costs involved in the same. Without registration, your logo or design will still have some protection but it is more difficult to prove your ownership.
If another business uses a name or brand which is similar to yours and (importantly) misleads or might mislead customers, you may be able to bring a claim against that other business for ‘passing off.’ Passing off claims can be difficult to pursue though and it is usually advisable to register your business name (and logo/images) as a trademark to guard against such passing off by a third party.
In the event that your business is not a limited company and another business registers your business name (or a name similar to it), you may be able to object to the registration of that business name by the third-party company but you must be able to show that you have goodwill in the name and that the other business name is the same or sufficiently similar to the name used by you. Similarly, if another business registers a domain name that uses your business name (or a name similar to it), you may be able to recover that domain name. You may also be able to make a claim for passing off (or trademark infringement if you have registered the name as a trademark).
Most joint ventures will be structured as an SPV company, a limited company set up with the intention for collaboration between the parties (who will usually be the shareholders of that SPV company).
In some cases, there is no difference as a partnership may be used as a structure for a joint venture. However, in most cases, a joint venture is usually limited in scope to a single project or is limited in duration. Unlike a general partnership, where all costs and profits are managed in common, the members of a joint venture will usually share the burden of costs but will manage their own profits. There are also distinctions when it comes to liability and careful attention should be paid if a joint venture is structured as a partnership.
You will first need to incorporate the company at Companies House and this will involve adopting articles of association under which that company will be governed. If you do not adopt bespoke articles of association, your company will be governed by the model articles of association. However, the model articles are unlikely to cover the complex circumstances of an SPV company and so you should ideally adopt bespoke articles of association. In addition, it is advised that the shareholders enter into a shareholders’ agreement to regulate the relationship and decision-making process between each of the shareholders. You should set out the details of the collaboration, either through a collaboration agreement, distribution or supply agreement, or perhaps a research and development agreement, or any other contract which contains the agreement between the parties.