<\/span><\/h2>\n\n\n\nJoint research and development is a type of corporate alliance, where multiple companies with aligned interests collaborate to efficiently develop products or technologies.<\/p>\n\n\n\n
In fields where technological innovation is rapid or product life cycles are shortening, there is a risk of losing out to competitors if too much time is spent on development.<\/p>\n\n\n\n
Even if you invest a significant amount of money and effort into research and development and successfully complete a new product, the value of the developed product can be greatly diminished if a competing company has already completed a similar product and introduced it to the market.<\/p>\n\n\n\n
While there are methods such as M&A and business alliances that require management-level decisions to develop products or technologies in a short period of time, joint research and development has less impact on management and can be approved by department heads depending on the content, making it a popular choice for many companies.<\/p>\n\n\n\n<\/span>Benefits of Joint Research and Development Agreements<\/span><\/h2>\n\n\n\n<\/span>Clear Division of Roles and Cost Sharing<\/span><\/h3>\n\n\n\nWhen conducting development work jointly with a third party, there are various patterns of cost sharing and role division related to development. There are patterns where only the cost is borne and the development work is done by the partner company, and patterns where the companies in charge are divided according to the development phase, and the costs necessary for development are borne by each company in charge. There is no fixed form.<\/p>\n\n\n\n
Therefore, one of the important roles of a joint research and development agreement is to clarify the roles, responsibilities, and cost burdens of each company.<\/p>\n\n\n\n
Furthermore, it is important to make the division of roles and cost sharing as feasible as possible, as it is possible to stipulate the right to claim damages in case the partner company neglects its obligations.<\/p>\n\n\n\n
<\/span>Reducing Development Costs and Risk Diversification<\/span><\/h3>\n\n\n\nThe benefits of joint research and development include being able to share the funds necessary for development among the participating companies and being able to keep personnel costs for development down.<\/p>\n\n\n\n
In addition, it becomes possible to undertake large-scale development that cannot be handled alone, and if results are not obtained, the cost damage can be distributed among the participating companies.<\/p>\n\n\n\n
<\/span>Complementing Each Other in Technology, Personnel, and Research Facilities<\/span><\/h3>\n\n\n\nIn addition to funds, research and development requires technology and personnel that the company lacks, as well as equipment that can prototype and evaluate.<\/p>\n\n\n\n
<\/span>Disadvantages of Joint Research and Development Agreements<\/span><\/h2>\n\n\n\n<\/span>Risk of Technology and Know-how Leakage<\/span><\/h3>\n\n\n\nIn a joint research and development project, developers working towards the same goal inevitably have to disclose information needed by the other party. As both parties are bound by confidentiality obligations, there is a possibility that important technologies and know-how may also be disclosed.<\/p>\n\n\n\n
Therefore, the biggest disadvantage of joint research and development is the risk of your company’s technology and know-how being leaked and learned by the other company.<\/p>\n\n\n\n
However, on the flip side, the opportunity to learn the other company’s technology and know-how can also be considered an advantage.<\/p>\n\n\n\n
In any case, careful consideration is required when determining the scope of information to be disclosed.<\/p>\n\n\n\n
<\/span>Difficulty in Monopolizing Outcomes<\/span><\/h3>\n\n\n\nIf you develop a new product or technology on your own, you can monopolize the results and gain an advantage over rival companies in your business operations.<\/p>\n\n\n\n
However, in the case of joint research and development, the other company may also have rights to the intellectual property based on the results, making it difficult to monopolize. There is also a possibility that the other company may use this intellectual property to compete with your business.<\/p>\n\n\n\n
<\/span>Potential Restrictions on Joint Research and Development with Other Companies<\/span><\/h3>\n\n\n\nDuring the period of joint research and development, the contract may include clauses prohibiting the other company from conducting similar joint research and development with a third party, such as a rival company (prohibition of competitive development).<\/p>\n\n\n\n
However, if your company possesses basic technology, various application products and technologies can be developed. Therefore, if joint research and development with other companies is restricted, it could have a significant impact on business activities.<\/p>\n\n\n\n<\/span>Key Points to Avoid Failure in Joint Research and Development Agreements<\/span><\/h2>\n\n\n\n<\/span>Be Careful When Setting the Purpose of a Joint Research and Development Agreement<\/span><\/h3>\n\n\n\nWhile the purpose of a joint research and development agreement tends to be overlooked, it is crucial as it can influence many clauses, potentially granting unnecessary broad rights to the other party or imposing excessive restrictions on your company.<\/p>\n\n\n\n
<\/span>Relation with Non-Compete Clauses<\/span><\/h4>\n\n\n\nThe scope of prohibition in non-compete clauses, mentioned in the previous paragraph, can significantly change depending on the ‘purpose’ that is identical or similar.<\/p>\n\n\n\n
For instance, if the purpose of joint research and development is set as ‘system development for communication devices’ and ‘development of voice recognition systems for communication devices’, the former would prohibit any joint development with third parties regarding all system development related to communication devices. In contrast, the latter would allow joint development freely as long as it is not related to voice recognition systems.<\/p>\n\n\n\n
Setting the purpose too specifically can limit flexibility, requiring contract modifications even for minor adjustments. Conversely, being too abstract can unnecessarily broaden the prohibition scope, so careful consideration is needed.<\/p>\n\n\n\n
<\/span>Relation with Intellectual Property Rights<\/span><\/h4>\n\n\n\nIf the purpose is set too broadly, the other company may claim rights to patent applications based on inventions resulting from joint research, separate from the joint research and development, if the application date falls within the effective period of the joint research and development agreement.<\/p>\n\n\n\n
On the other hand, if the purpose is set too specifically, there is a risk that the other company may apply for a patent independently, even if the invention they made is a result of the joint research and development, on the grounds that it is outside the purpose.<\/p>\n\n\n\n
<\/span>Relation with Confidentiality Obligations<\/span><\/h4>\n\n\n\nGenerally, in clauses that establish confidentiality obligations, the other party’s confidential information can be used only within the scope of the purpose, or use outside the purpose is prohibited.<\/p>\n\n\n\n
However, if the purpose is set too broadly, even if your company’s confidential information is used in a project separate from the actual development, it would not constitute a breach of contract. Conversely, if the purpose is set too specifically, even a slight application development could potentially breach the contract.<\/p>\n\n\n\n<\/span>The Biggest Point is the Handling of Results<\/span><\/h3>\n\n\n\nThe most time-consuming discussion in a joint research and development agreement is probably the ‘handling of results’.<\/p>\n\n\n\n
There are many points that neither party can concede, such as the ownership of intellectual property rights based on the results, the right to implement, and the right to license, as they directly affect your company’s business. However, the biggest point to avoid unnecessary trouble is to agree as much as possible before starting joint research and development.<\/p>\n\n\n\n
<\/span>Ownership of Intellectual Property Rights<\/span><\/h4>\n\n\n\nIntellectual property rights based on inventions made in joint research and development are typically held by the company to which the inventor belongs.<\/p>\n\n\n\n
However, this is conditional on having provisions such as ‘the company will inherit intellectual property rights based on inventions, etc. made by employees in their work’ in contracts with employees and regulations on job inventions.<\/p>\n\n\n\n
In this case, the intellectual property rights arising from joint research and development will belong to the company to which the inventor belongs, but it is also possible to stipulate differently in the contract, such as:<\/p>\n\n\n\n