GERMANY Law and Practice Contributed by: Leif Gösta Gerling, Matthias Krämer, Anna Reuber and Jiabao Gerling-Li, LPA
Background IP Considerations Licensing arrangements typically provide optimal flex - ibility for pre-existing (background) IP, allowing the JV parties to maintain underlying ownership whilst grant - ing necessary usage rights to the JV. This approach preserves each JV parties’ fundamental IP assets whilst enabling effective collaboration. Foreground IP Treatment Foreground IP created during JV operations permits more varied treatment approaches. Joint ownership or assignment to specific JV parties may prove appropri - ate based on strategic business considerations. Typi - cally, foreground IP is used only for the benefit of the JV, although the JV parties might obtain a licence to use such IP (eg, for other fields of use). Upon termina - tion of the JV, provisions may determine whether fore - ground IP reverts to one or more of the JV parties or whether JV parties receive perpetual cross-licences. Statutory and Cross-Border Considerations Regardless of whether licensing or assignment is selected, German employment invention law require - ments must be satisfied, and cross-border patent filing obligations may influence the optimal struc - ture. Jurisdictional differences in IP protection and filing requirements may favour specific approaches depending on the JV’s international scope. German law’s contractual flexibility enables JV agree - ments to reflect participating JV parties’ strategic objectives whilst ensuring operational efficiency and protecting the respective JV parties’ interests through - out the JV’s life cycle and beyond termination. 8.3 ESG Considerations in JVs Regulatory Context ESG has become a central compliance and govern - ance factor for JVs in Germany and the EU, and its importance will continue to grow. ESG is no longer a short-term trend – it has become a fundamental driver of corporate sustainability. Initiatives such as the European Green Deal, the EU Taxonomy Regula - tion and related measures – including the Sustainable Finance Disclosure Regulation (SFDR) and Corporate Sustainability Reporting Directive (CSDR) – have cre - ated a rapidly evolving regulatory environment that is expected to tighten and expand further. Aligning
with ESG principles at an early stage can help avoid significant risks for a JV and capture long-term value. Why ESG Matters • Compliance risk: non-compliance can result in substantial fines and reputational damage. While Germany does not recognise corporate criminal liability in the same way as, for example, France, monetary penalties remain a serious concern. • Value creation: adhering to ESG standards can enhance enterprise value and strengthen a JV’s market position. • Tailored obligations: requirements vary based on the JV’s sector and activities. Key Legal Requirements National level • Environmental: regulation is advanced in real estate, with laws such as the German Building Energy Act (GEG), the German Carbon Dioxide Cost Allocation Act (CO2KostAufG) and the Ger - man Building Electric Mobility Infrastructure Act (GEIG). • Social and Governance: the German Supply Chain Due Diligence Act (LkSG) applies to larger enter - prises, mandating human rights and environmen - tal standards across supply chains. The German Whistleblower Protection Act (HinSchG) requires internal reporting mechanisms to protect whistle- blowers. European level EU-wide rules impose additional obligations in certain sectors to ensure responsible sourcing and supply chain due diligence (eg, the Conflict Minerals Regula - tion). 9. Exit Strategies and Termination 9.1 Termination of a JV JV agreements in Germany may terminate in several ways:
• automatically upon expiry of a fixed term; • by mutual agreement of the JV parties; or
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