An Executive Voices Blog by Karthika Perumal and Michael Samardzija, colleagues at Womble Bond Dickinson LLP

Co‑branded products are everywhere, from fitness technology to consumer electronics. When two companies put their brand names on the same product, it often appears to be a marketing decision. Behind the scenes, however, these collaborations raise a harder question: who owns the innovation?

When patents are involved, the answer can determine who controls the product, who profits from it, and what happens when the partnership ends.

Recent co‑branded products illustrate why patents matter. Apple’s long‑running collaboration with Nike on fitness technology—which spans devices, software integration, and hardware features—required careful allocation of ownership and control over patented technology. More recently, co‑branded hardware launches such as Nike‑branded Beats earbuds highlight how consumer products can embed patented features developed by one or both partners.

In each of these examples, patents are not just legal paperwork. They define who can make, sell, license, or improve the product over time. As a result, one of the first issues collaborators must address is background IP versus foreground IP.

Background IP is what each party brings to the table. This includes existing patents, know‑how, software, or processes developed before the collaboration. It is best thought of as each partner’s pre‑existing toolkit. Foreground IP is what gets created during the collaboration itself. This includes new inventions, improvements, and discoveries that result from joint work.

The distinction matters because disputes often arise when a “new” feature is actually an improvement on one party’s background technology. Without clear definitions, both sides may believe they own the resulting patent.

There is no single rule for ownership in co‑branding or joint development. Ownership is determined by contract. Some collaborations assign all foreground patents to one party, while granting the other a license. Others divide ownership by field of use, geography, or product line.  In some cases, patents are jointly owned, although this approach can create long‑term complications.

This is because, while joint ownership may seem fair, but it often reduces commercial flexibility.  In many jurisdictions, each co‑owner can license the patent independently, sometimes without accounting to the other. At the same time, enforcing the patent typically requires cooperation from all owners. What looks equitable at the start can become a bottleneck later.

Another source of tension in these agreements is control versus value. Owning a patent outright gives a company control over licensing, enforcement, and future strategy. Shared ownership or licensing arrangements, however, can still deliver significant value if structured properly.

For example, a company may accept less control if it gains exclusive rights in its core market or if the collaboration accelerates time to market. Problems arise when parties fail to decide whether they care more about owning the patent or being able to use it freely. Vague compromises often satisfy no one.

Something else to consider is the fact that collaborations rarely last forever. When they end through acquisition, termination, or strategic shift, patent ownership suddenly becomes critical.  Who can continue selling the product? Who owns improvements? Can either party block the other?

Well‑drafted agreements address exit scenarios explicitly. They define post‑termination licenses, ownership of pending patent applications, and rights to future improvements. Weak agreements fail to address these matters, leaving courts to interpret intent years later (often after relationships have deteriorated).

Weak agreements also often rely on phrases like “jointly developed IP will be shared” without explaining how. They fail to address improvements, enforcement, or future products.  Over time, this vagueness creates friction. Partners disagree about ownership, hesitate to invest further, or block each other’s deals. In the worst cases, innovation stalls because no one is sure who can act without triggering a dispute.

Strong co‑branding and joint development agreements, however, share several characteristics.

They include clear definitions of background and foreground IP, unambiguous ownership rules for patents and improvements, and defined control over patent prosecution, including who decides whether to file patents and where. They also provide licensing clarity by specifying who canuse the technology, in which markets, and on what terms.  Finally, they address exit provisions that anticipate separation and allocate rights accordingly. These agreements trade brevity for clarity and save enormous costs in the long run.

Co‑branding and collaborative development can create powerful products, but patents determine who truly owns the innovation. Understanding background versus foreground IP, making deliberate choices about control and value, and planning for the end of the relationship are not legal formalities. They are business decisions that shape whether collaboration becomes a growth engine or a long‑term liability.

Womble Bond Dickinson is a transatlantic law firm with over 1,300 lawyers across 40 offices in the U.S. and U.K., providing comprehensive legal services to clients worldwide. The company’s global reach is matched by deep local knowledge, allowing it to support clients in key licensing sectors such as entertainment/character, sports, fashion (apparel and footwear), consumer packaged goods, food and beverage, publishing, collegiate, celebrity, music, art, pet, home furnishings, fitness and wellness, outdoor products, heritage brands, and corporate and non-profit branding.