Joint development agreements

How BC law treats it

A joint development agreement (JDA) is governed by contract law, not by a dedicated statute. In BC the agreement's terms are interpreted in light of their commercial purpose and the surrounding circumstances (Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53), so clear drafting is the main protection. The core clauses are each party's contributions and milestones, governance, budget, confidentiality, ownership of background and foreground intellectual property, licences, commercialization rights, and termination. Ownership of the results is governed by federal intellectual property law unless the contract allocates it. Under the Copyright Act, a contractor or partner who writes code or other works generally owns the copyright unless it is assigned in writing (s. 13(4)). Under the Patent Act, inventors who jointly conceive an invention may become co-owners. What each co-owner of a Canadian patent may do without the other's consent is not settled clearly enough to rely on, so a JDA should state who owns, who files, who pays, and who may license or exploit jointly developed inventions. If the parties are competitors, the Competition Act applies. Agreements between competitors to fix prices, allocate markets or restrict output are criminal offences under s. 45. Other collaborations can be reviewed by the Competition Tribunal under s. 90.1 if they substantially lessen or prevent competition. A JDA should therefore be limited to the joint project and should not be used to coordinate pricing or customers outside it.

What it means for your business

A joint development deal can accelerate a product, but unclear terms create disputes exactly when the technology becomes valuable. Founders and technology companies need to know who will own the results, who can sell them, and what happens to each party's existing technology. Investors and buyers will review the JDA in due diligence, and joint ownership with no exploitation rules can block a later financing or sale. Example: A Vancouver clean tech startup and an Alberta manufacturer sign a JDA to build a battery monitoring device. The agreement gives the startup ownership of the software, the manufacturer ownership of hardware improvements, and each a licence to use the other's contribution in its own field.

Risks and common mistakes

Leaving ownership of newly created intellectual property to be agreed later. Failing to define background intellectual property, so one party later claims rights in the other's pre-existing technology. Assuming jointly owned inventions can be freely exploited and licensed by either party without an agreed framework. Sharing pricing or customer plans with a competitor partner beyond what the project requires. Omitting exit terms covering what happens to the technology, data and licences if the project ends early.