Collaboration is integral to innovation. Whilst joint ownership arrangements can seem beneficial, promising mutual advantages and shared success; in South Africa, the notion of joint ownership in equal undivided shares requires careful consideration. This article explores the implications of joint ownership, highlighting potential problems and advocating for explicit agreements to mitigate risks. 

In South Africa, when two or more parties jointly own a patent in equal and undivided shares, they each have an undivided right to the patent. Section 49(1) of the Patents Act 57 of 1978 (“the Patents Act”) provides that where a patent is granted to two or more patentees jointly, each of the joint patentees shall, in the absence of an agreement to the contrary, be entitled to an equal undivided share in the patent.

Section 49(2) of the Patents Act further provides that a joint patentee shall not be entitled to deal with the patent in any way unless there is an agreement to the contrary and unless consent of the other joint patentee or patentees has been obtained. This includes: 

• Making, using, exercising, offering to dispose of, or importing the patented invention; 
• Granting a licence or assigning the patent; and 
• Instituting any proceedings relating to the patent: 

Consequently, joint patentees must act collectively in all matters concerning the patent. However, this may lead to unintended and inequitable consequences, particularly when joint owners have differing ideas regarding the patent or differing capabilities to exploit the patent. 

Consider a scenario involving two joint patentees:  

Patentee A and Patentee B develop a new type of solar panel technology and jointly apply for a patent. The patent is granted, making them co-owners under Section 49 of the Patents Act. However, they do not sign a co-ownership agreement. 

Patentee A wants to license the patent to a major energy company for mass production. 

Patentee B refuses, as it wants to manufacture the product itself instead of licensing it. 

Because Patentee B’s consent is legally required to license the patent, Patentee A is unable to proceed, leading to a stalemate where neither party can commercialise the invention effectively. 

Consequences:  

• The patent remains unused while competitors develop similar technology. 
• Potential investors back out due to ownership disputes. 
• The patent eventually expires without generating profit. 

If joint patentees disagree on how to exploit the patent, it can lead to legal disputes, blocking commercialization. 

One co-owner may refuse to allow licensing or assignment, preventing the other from commercialising the patent. 

Potential investors or licensees may hesitate to engage with the patent if multiple approvals are required, making negotiations complicated. 

If one co-owner wants to enforce the patent against an infringer but the other does not, enforcement action may be delayed or blocked. 

To avoid issues under Section 49, joint patentees should: 

✅ Sign a co-ownership agreement outlining each owner’s rights, including licensing, assignments, and dispute resolution. 

✅ Agree on commercialization strategies before filing the patent. 

✅ Include exit clauses in the agreement in case one owner wants to sell or assign their share. 

Without explicit agreements, joint patentees risk facing limitations on their ability to exploit, assign, or license their intellectual property, potentially resulting in lost opportunities and financial disadvantages. An uncooperative joint patentee can, as seen above, impede the commercialisation efforts of others. 

By proactively addressing these issues, collaborators can ensure that their collaborative efforts lead to mutual benefits and successful commercialisation of their intellectual property. Clear agreements not only protect the parties involved but also enhance the potential for innovation to reach the market effectively.