LUXEMBOURG Law and Practice Contributed by: Anna Gassner, Philipp Mössner, Andrea Carraretto and Etienne Weryha, GSK Stockmann SA
deliberation of or vote on the conflicted matter. Any conflict of interest must be recorded in the minutes or resolutions of the management body’s meeting and a special report in this respect will need to be made to the shareholders of the JV vehicle at the next general meeting of shareholders before any resolution is put to the vote. As contemplated under 6.2 Governance and Deci- sion-Making , it is common that a director/manager of a JV participant is appointed as a director/manager of the JV vehicle, as long as they perform their duties in the best interests of the JV vehicle and not in the best interests of the JV participant. According to case law, the mere fact that an individual holds an executive role at a JV participant does not, in itself, establish a conflicting financial interest with the JV vehicle. From an IP perspective, when setting up a JV corpo - rate entity, three main IP issues need to be considered. Corporate entity Firstly, the ownership of pre-existing IP that each party brings into the JV should be defined, as well as the terms on which the JV will be allowed to use this IP. Secondly, it is important to determine who will own the IP developed during the course of the JV and who will have the rights to use, license, and commercialise the new IP both during the life of the JV and after its termination. Thirdly, clear terms for the protection of confidential information and trade secrets exchanged between the JV partners are to be established. Finally, the conditions under which the JV can license its IP to third parties, including revenue-sharing arrange - ments and control over licensing decisions, are to be defined, as well as IP valuation methods, especially in order to assess how IP valuation impacts equity shares in the JV. Contractual collaboration When engaging in contractual collaborations, sev - eral key IP issues should be carefully considered to ensure that the rights, obligations, and expectations 8. IP and ESG 8.1 Ownership and Use of IP Key IP Issues
of all parties are clear and protected. In particular, ownership of pre-existing and newly created IP dur - ing the collaboration is to be clearly defined, just as questions of revenue sharing and royalties are to be answered. Liability issues, if the collaboration results in the infringement of third-party IP rights, are to be addressed, along with what happens to the IP after the collaboration ends, including rights to continued use, licensing, and the return or destruction of confi - dential materials. JV agreement IP issues are usually comprehensively addressed in JV agreements. They cover questions regarding the ownership of pre-existing IP and which usage rights are licensed to the JV and to the other party, the own - ership of newly created IP and how to commercialise and exploit it, and what happens to the IP if the col - laboration ends. Moreover, in complex JVs, dispute mechanisms should be included to handle any conflicts over IP ownership, usage, or infringement. Strict NDAs ensure that all IP and proprietary information exchanged remains confidential, helping to build and foster trust within the JV. 8.2 Licensing v Assignment of IP Rights When deciding whether to license or assign IP rights, it is important to conduct a thorough evaluation of the IP owner’s long-term objectives, financial require - ments, and strategic interests. Licensing IP rights is ideal when the IP owner wants to retain control over the IP, continue benefiting from the IP, and is interested in long-term revenue streams. Assigning IP rights should be considered when the IP owner seeks immediate capital or wants to transfer the responsibility of managing and exploiting the IP to another party. The assignor, however, loses all control and future revenue potential from the IP. 8.3 ESG Considerations in JVs ESG Regulations and Developments Affecting JVs Even if a JV is not classified as a fund, ESG factors still warrant careful attention. Depending on the busi - ness activity of the JV and its shareholders, the struc - ture may be subject to varying levels of ESG obliga -
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