So you have a conventional NDA with someone. Each of you own your own IP. That IP is also well defined: it is anything that you brought into this relationship.
But what happens with NEW IDEAS that you create under this NDA? What happens when you collaborate?
Conventional NDAs are silent about what happens when something new is created. This leads to all kinds of problems, like who owns that great idea that comes from your mentor? Without an IP transfer provision, YOUR MENTOR owns that great idea, not you.
This is the unethical part of most NDAs: as a collaborative community, we want the ENTREPRENEUR to own all the ideas associated with their project.
Collaboration IP Transfer Provisions
The Ethical NDA and the various Ethical Collaboration Agreements all have an “IP Transfer Provision” that deals with the question of what happens to NEW IDEAS that we create together.
There are many different ways to do an IP transfer provision. The Ethical Collaboration Agreements have two main ones.
Non-Exclusive License IP Transfer Provision
A non-exclusive license transfer provision is the default provision in our collaborative communities.
A non-exclusive license means that when you come up with a great idea to help an entrepreneur, you allow them to use the idea free of charge. The entrepreneur can incorporate it into their product or business, and your suggestion has helped them, which is the whole point of collaboration.
But the entrepreneur owes you nothing for the idea. If you have been in the entrepreneurial community for a while, you know that ideas are cheap, but the execution is what really matters. A great idea that is never executed is pointless. Only when the entrepreneur puts their energies into building the product or service, then selling it – only then does the idea have value.
You still own the idea that you created, and you might use that same idea with other entrepreneurs or develop it yourself. You could – if you wanted to – share the idea with the entrepreneur’s competitor.
Patent Assignment IP Transfer Provision
A patent assignment IP transfer provision means that you agree to assign all your rights to your idea to the entrepreneur with whom you are collaborating.
The patent assignment IP transfer provision defines a dollar amount – usually $100 – that an entrepreneur will pay the collaborator when the entrepreneur files a patent using the collaborator’s idea. The $100 is the value of the idea at the time of invention. As we all know, the value of an idea comes only after an entrepreneur prototypes, builds, and tests the product, then sells it into the marketplace.
As a collaborative community, we want the entrepreneur to be successful. We also know that everybody has signed the same agreement, so other people are agreeing to help us in the same way we are helping them.
We recommend using a patent assignment IP transfer provision only for very tight-knit and well defined situations. For example, a makerspace might have an invention night where inventors agree to help each other with their projects and they might us the patent assignment provision.
When To Use The IP Transfer Provisions
We recommend using the non-exclusive license IP transfer provision in all collaboration agreements. The Ethical Collaboration agreements are designed to identify “unencumbered ideas” that are created during collaboration. Unencumbered ideas are new ideas that come from collaboration, but are not previously assigned to your employer, might be public knowledge, or where you might not have the ability to transfer the ideas. If you have an employment agreement, for example, you might not be able to share your idea.
The non-exclusive IP transfer provision is designed to be acceptable to your company’s lawyers, since you are only sharing ideas that will not harm your company.
We recommend using the patent assignment IP transfer provision when you have collaborators who know what they are agreeing to do. We recommend that they all go through a seminar or course on collaboration so that they have good expectations about what is going on.
Our goal is always to break down the barriers to collaboration. One of the biggest barriers is knowing that everyone is playing by the same rules and agreeing to the same conditions.