Joint ownership of a patent and a copyright: what each co-owner may do alone

Joint intellectual property is created easily: founders who developed a product before they set up a company, two companies that developed a technology together, developers who wrote code jointly, or the heirs of an author. This guide explains what the law sets when a patent or a copyright has more than one owner, and what is worth setting in the agreement between them. Trademarks, designs and trade secrets are not covered here; on trade secrets, see trade secrets: protection and enforcement in Israel.

When does joint ownership of a patent or a copyright arise?

In a patent: an invention or a patent can be jointly owned by several persons (section 77(a) of the Patents Law, 5727-1967). Whoever filed a patent application is regarded as the owner of the invention, as long as the contrary has not been proved (section 76), and rights in an invention and in a patent can be transferred in writing and pass by operation of law (section 82). When one of the inventors is an employee, there is a separate rule: an employee must notify their employer in writing of an invention they made as a result of their service or during the period of their service (section 131), and an invention made as a result of their service and during the period of their service (a “service invention”) becomes the property of the employer, if there is no other agreement between them, unless the employer waived it within six months from the day the notice was given to it (section 132(a)). And if the employee gave notice that, absent a reply to the contrary within six months, the invention would be theirs, and the employer did not reply to the contrary, the invention does not belong to the employer (section 132(b)).

In copyright: a “joint work” is a work created by several authors jointly, where the share of each of them cannot be distinguished (section 1 of the Copyright Act, 5768-2007). The author is the first owner of the copyright (section 33(1)), subject to the rules on a work of an employee (section 34) and on a commissioned work (section 35). Copyright can be transferred by contract or by operation of law (section 37(a)), and when it passes to several people, for example to heirs, it also becomes jointly owned. Copyright in a joint work lasts for the life of the last surviving author, and for another seventy years after their death (section 39).

A joint patent: what may each co-owner do alone?

The Patents Law sets a detailed system of rules, and most of them apply only when the agreement between the co-owners has no other provision:

• Shares: when an invention or a patent has several owners, they are regarded, as regards their rights between themselves, as owners of equal shares, unless a different division was set in a written agreement between them or by operation of law (section 77(b)).
• Exploitation: each co-owner is entitled to make reasonable use of the invention, unless there is a different provision in written agreements between them or by operation of law. If the use prevents such use by another co-owner, the other co-owners may choose to demand from the user a proper royalty or their share of the profits it produced (section 78).
• Selling a product: a person who bought in good faith from one of the co-owners a product protected by the joint patent is regarded as if they bought it from a sole patent owner; whoever argues that the purchase was not in good faith bears the burden of proof (section 79).
• Transferring the share: each co-owner may transfer ownership of their share without the consent of the other owners, unless agreed otherwise and the agreement was recorded in the Register (section 80).
• A license to another person: a license to exploit a jointly owned patent will be granted only with the consent of all the co-owners (section 88(a)).

When the co-owners do not agree, the court may, at the request of some of them, order the other co-owners to take particular steps to exploit the patent or a right in it, to grant a license for it, or any other matter concerning the patent, and may even allow one of the applicants to take the step instead of the respondents (section 81(a); section 88(b)). Such an order will not be given if it harms the rights or duties of a trustee in bankruptcy, a receiver, a liquidator, a guardian or an executor of a will, or if it contradicts a term of a written agreement between the co-owners (section 81(b)).

Registration also matters toward third parties: a transfer of a patent under an agreement has no effect toward anyone who is not a party to the agreement unless it was registered (section 83), and a license also has no effect toward anyone who is not a party to it unless it was registered (section 87). And a patent remains in force only if the renewal fee was paid on the set dates (section 56), so it is worth setting in the agreement who pays it.

Who may sue an infringer of a joint patent?

The owner of a patent or the holder of an exclusive license, and they alone, are entitled to file a claim for infringement (section 178(a)). In a jointly owned patent, each co-owner may file a claim (section 178(b)). Co-owners who did not join as plaintiffs, and an exclusive licensee who did not join, will be joined by the plaintiff as defendants (section 178(c)), and anyone joined this way who did not take part in the proceedings will not be ordered to pay costs (section 178(d)).

What does the Copyright Act say about joint owners?

Here the difference is large. The Copyright Act defines a “joint work” (section 1) and sets its term of protection (section 39), but it has no provisions parallel to sections 77 to 81 and 88 of the Patents Law: it does not set the share of each owner, what each of them may do with the work alone, whether they may transfer their share, or who must consent to a license.

Some provisions are relevant:

• Transfer and license: a contract to transfer copyright or to grant an exclusive license for it requires a written document (section 37(c)). An exclusive license gives its holder an exclusive right and restricts the copyright owner from doing the act and from allowing another person to do it (section 37(d)).
• An infringement claim: an action for infringement of copyright may be filed by the copyright owner, and if an exclusive license was granted, also by the licensee. The plaintiff will join as a party any person who is entitled to sue, unless the court, at the plaintiff’s request, exempted the plaintiff from doing so (section 54).
• Moral right: the author’s right to have their name credited on their work, and that no distortion or other harm be done to it that would hurt their honor or reputation, is personal and cannot be transferred (sections 45(b) and 46). It does not apply to a computer program (section 45(a)).

What fills the gap? The Movable Property Law, 5731-1971 (חוק המיטלטלין, התשל״א-1971), sets rules of co-ownership, among them a presumption that the co-owners’ shares are equal (section 9(b)) and the right of each co-owner to demand the dissolution of the co-ownership at any time (section 10(a)). Under section 13 of that Law, its provisions will apply, “insofar as appropriate to the matter and with the necessary changes, also to rights”, where another law has no special provisions on the matter. Whether, and how, these rules apply to a jointly owned copyright, the Copyright Act itself does not say. That is exactly the reason to set the relationship in an agreement.

What does the law set: patent versus copyright?

What should an agreement between co-owners of intellectual property set?

In a patent, a written agreement prevails over most of the default rules; in copyright, it fills the gap. Points worth checking:

• The ownership shares: equal or otherwise. In a patent, without a written agreement the shares are equal (section 77(b)).
• Independent use: who may exploit the asset and in which fields, and whether the user pays the others a royalty or a share of the profits (compare section 78).
• Licenses to a third party: who decides, by what majority, and how the consideration is divided. In a patent, a license requires the consent of all the co-owners (section 88(a)), subject to the court’s power under section 81.
• Transfer and exit: restrictions on transferring a share, a right of first refusal, and a buyout mechanism. In a patent, a co-owner may transfer their share without consent, unless agreed otherwise “and the agreement was recorded in the Register” (section 80), so it is worth recording the agreement.
• Costs: who pays renewal fees (section 56), and registration and enforcement proceedings.
• Enforcement: who decides on an infringement claim, who finances it, and how what is awarded is divided (compare section 178 of the Patents Law and section 54 of the Copyright Act).
• Further developments: who owns improvements that one of the co-owners develops later.
• Death, dissolution or insolvency of a co-owner: an order under section 81 will not be given if it harms the rights or duties of a trustee in bankruptcy, a receiver, a liquidator, a guardian or an executor of a will (section 81(b)(1)). A provision in earlier legislation that concerns bankruptcy is read today as a provision that concerns insolvency proceedings of an individual (section 375(a) of the Insolvency and Economic Rehabilitation Law, 5778-2018 (חוק חדלות פירעון ושיקום כלכלי, התשע״ח-2018)).
• Settling disputes: mediation, arbitration or court.

When the joint ownership is part of a wider business collaboration, see a business cooperation and joint venture (JV) agreement: what it must include, and when a business partnership breaks up, dissolving a business partnership: when the partnership dissolves, and what happens to the assets and debts. On reviewing and drafting agreements, see the commercial contracts page.

Frequently asked questions

Can a co-owner of a patent grant a license without my consent?

No. A license to exploit a jointly owned patent will be granted only with the consent of all the co-owners (section 88(a) of the Patents Law). However, the court may, at the request of some of the co-owners, order the other co-owners to grant a license or to take steps to exploit the patent, provided that the order does not contradict a term of a written agreement between the co-owners (sections 81 and 88(b)).

Can a co-owner transfer their share in a patent to someone else?

Yes, without the consent of the other owners, unless agreed otherwise and the agreement was recorded in the Register (section 80 of the Patents Law). A transfer of a patent under an agreement has no effect toward anyone who is not a party to the agreement unless it was registered (section 83).

My co-owner exploits the patent alone and makes a profit. Am I entitled to a share?

Each co-owner is entitled to make reasonable use of the invention, unless there is a different provision in written agreements between them or by operation of law. Only if the use prevents such use by another co-owner may the other co-owners demand from the user a proper royalty or their share of the profits it produced (section 78 of the Patents Law).

We wrote code together. Who owns the copyright?

A work created by several authors jointly, where the share of each cannot be distinguished, is a “joint work” (section 1 of the Copyright Act), and the author is the first owner (section 33(1)). But a work that an employee created for the purpose of their work and in the course of it belongs to the employer, unless agreed otherwise (section 34). The Act does not set what each of the joint owners may do alone, so it is worth setting this in an agreement.

Can a joint owner of a copyright sue an infringer alone?

The copyright owner may file an action for infringement, but must join as a party any other person who is entitled to sue, unless the court, at the owner’s request, exempted the owner from doing so (section 54 of the Copyright Act). In a patent, each co-owner may sue, and co-owners who did not join will be joined as defendants (section 178 of the Patents Law).