Joint Venture Strategies

Joint Venture Strategies

Design, Bargaining, and the Law

Zenichi Shishido, Munetaka Fukuda and Masato Umetani

Although they have the potential to create synergies, joint ventures by their nature contain inherent risk. Therefore, each partner in a joint venture needs to incentivize each other in order to maximize their own payoff. Extensive pre-contractual and post-contractual bargaining is essential. This book provides successful bargaining strategies from the point of view of each partner company. Using game theoretical framework to analyze joint venture strategy, it describes practical and legal issues that arise when creating synergies and incentive bargaining in a joint venture. With a particular focus on intellectual property law, including analysis based on many real cases, the book covers issues relating to creating synergies, corporate law issues of conflicts of interest, and antitrust law issues relating to cooperation between independent companies.

Chapter 7: Intellectual property and incentive bargaining

Zenichi Shishido, Munetaka Fukuda and Masato Umetani

Subjects: economics and finance, game theory, law and economics, law - academic, company and insolvency law, law and economics


JV partners usually contribute some form of intellectual property (IP) to their joint ventures. The allocation of IP rights to the joint venture and among the partners and definition of the terms under which the IP may be exploited are the legal means of delineating the scope of the partners’ and the joint venture’s respective businesses. These issues are important matters that influence sharing of control, sharing of total return, and threat of exit. The term “intellectual property” means inventions, devices, new varieties of plants, designs, works and other property that is produced through creative activities by human beings (including discovered or solved laws of nature or natural phenomena that are industrially applicable), trademarks, trade names, other marks that are used to indicate goods or services in business activities, and trade secrets and other technical or business information useful in business activities. IP rights include patent rights, utility model rights, plant breeder’s rights, design rights, copyrights, trademark rights, other IP-related rights that are stipulated by laws and regulations, and rights pertaining to an interest protected by law. The legal protections that result from conferral of IP rights convert technical or reputational information into assets. In essence, IP rights grant the right to prevent third parties from unauthorized use of human intellectual works such as inventions, or devices and intangiblessuch as trademarks, thereby conferring economic benefit through artificially created scarcity.

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