Advising on a Joint Venture

Jane LambertJane Lambert

12 July 2010

I was asked by a business support agency to advise an independent inventor who had negotiated a joint venture with an existing manufacturer in the relevant industry. The inventor had agreed to set up a new company with the manufacturer which was to manufacture the invention in India and distribute it in the UK. The manufacturer had drawn up a number of draft agreements with, or affecting, the inventor. My instructions were to review those drafts and suggest improvements.

The yardstick by which I considered those drafts was how well they served the inventor’s interests.   Having invented the product and having spent a lot of money on patenting and developing it, he needed the best possible income from the sale of those products.     I advised him to require distributors to hold sufficient stocks of the product to meet demand and to pay minimum periodic licence fees.    Should the distributor fail to sell the product in satisfactory quantities the inventor needed to be able to find someone else to sell those goods.   Were the distributor to encounter financial difficulty the inventor needed to be able to bring the agreement to an end quickly.    He needed regular sales data from the distributor including audited periodical accounts.    Should the product be improved the inventor needed to own those improvements.   When a rival product entered the market he needed to ensure that his distributor would continue to market his invention for so long as it had a market.   The inventor needed to be able to enforce any patent or other intellectual property to which he was entitled and his position had to be protected should that patent or other intellectual property be revoked.    Finally, there had be a cheap and effective procedure for resolving any disputes that may arise between the inventor and any other party.

I reviewed the draft by that yardstick in a written advice. In my advice I suggested a number of changes the agreements. I also checked and advised on the legal protection for the invention in the client’s main markets and in India.

India is an increasingly attractive alternative to China for outsourcing manufacturing. It effectively shares a common language and its legal and financial systems are similar to our own.  It was for this reason that I chaired a seminar in Liverpool on IP in India in conjunction with Kirwans Solicitors on 18 Sep 2007. I also presented the paper “Intellectual Property in India: The Substantive Law” at the seminar.