Prototypes are the backbone of innovation, especially in the machinery and software industries. Interaction with business partners is a critical point at which the protection of corporate rights is imperative.
Initial Situation
If a company is in the process of developing a prototype, whether in collaboration with or specifically for a business partner, or if innovative products have already been de-signed that are now to be tested in practical use, legal considerations must take priori-ty. This article sheds light on the testing phase of prototypes.
Once a prototype is completed, the testing phase comes into focus. If these tests are conducted internally (i.e., by employees), the legal situation is straightforward. The challenge begins when external partners are involved—especially when potential cus-tomers are concerned. Here, legal subtleties must be observed.
Key Legal Aspects
Preserving Novelty in Patents and Designs: Patents and designs are only registered if they are "novel”. Disclosure without a confidentiality agreement to external partners can already be detrimental to novelty. Therefore, patents and designs must be filed be-fore the testing phase or clear confidentiality agreements must be concluded with the external partner.
Clearly Define Obligations: At the heart of collaboration with external testing part-ners is the precise definition of mutual obligations. How should the prototype be test-ed? Which specific characteristics are to be examined? What environment will the tests be conducted in? The answers to these questions should be documented in writing. If the testing incurs costs, the payment terms must also be clearly agreed upon.
Liability for Failed Tests: What happens if damage occurs during the tests? Clarifying the issue of liability is crucial to determine who is responsible for any damages to the prototype or to the testing company. This aspect is particularly important for initial tests.
Handling Test Results: A clear agreement on who owns the test results (or typically the copyright of their documentation) and how they may be used is essential. Usually, a confidential treatment of the results over a certain period is advisable.
Rights to Improvements and Ideas: Although the owner of the intellectual property rights to the prototype is usually determined before testing begins, innovative ideas for improvements can arise during the tests. It must be regulated who legally owns these new ideas. As the owner of the prototype, care should be taken to ensure that all im-provements remain the property of the prototype owner.
The Necessity of a Contract for the Testing Phase: Depending on the scope of the tests and especially in the case of significant financial consequences, a contract is advis-able for security and clarity. If there is a risk or chance of new intellectual property rights arising during the tests, a contract becomes essential to prevent the prototype owner from being restricted in the use of improvements. If the prototype is to be filed as a patent or design only after the testing phase, a confidentiality agreement is highly recommended.
