Discusses the legal requirements/options for joint venture/licensing in this market.
Last Published: 7/23/2018

Joint ventures (JV) are a common feature of Australia’s commercial and legal environment.  Broadly similar to US practice, joint venture forms in Australia include:

Unincorporated Joint Ventures

The rights and obligations of these joint venture parties are set out extensively in the JV documents.  An unincorporated JV is sometimes more suitable for a single project or business venture, for example, in sectors like the mining, oil, and gas industries.  The joint venture document usually expresses the limitations and conditions of the JV so that a broader partnership is not implied.  The application of partnership laws comes with other tax and liability implications.

Incorporated Joint Ventures

This usually involves the joint venture parties’ conducting their business through incorporation of a JV company or trust. The parties commonly set out their respective rights and obligations in a shareholder or unit holder’s agreement to resolve any dispute not regulated by the Corporations Law or the constitution of the company or trust.

Unit Trusts are devices that enable the separation of legal and beneficial interests in assets and the income derived therein. In a JV situation, the participants wish to insure that their entitlements are fixed rather than discretionary. A unit trust is a legal entity in which the entitlement of beneficiaries is expressed in units relative to the total number of fixed units.

Limited partnerships are creations of statute and they are rarely used in Australia. They remain partnerships of general law and, therefore, do not give rise to the existence of separate legal entities. A limited partnership structure requires at least one general partner to have unlimited liability and partners whose liability is limited to the extent of their investment in the partnership.

They can also be created to suit the needs of the particular participants. For example, one participant in an unincorporated JV could be the trustee of a unit trust, while one shareholder in an incorporated JV could also be the trustee of a unit trust.

Licensing

Australian industry is known for its practical approach to problem solving. In this context, the role of licensing is of particular importance for Australian commerce and industry. The common language and cultural similarities make negotiation and understanding easier.

License agreements involving Australian companies should contain the usual terms one would find in a license in the United States, for example, type of license being granted (i.e., sole, exclusive or non-exclusive), territory covered, license fee or royalty, licensee’s duties and obligations, period of grant and field use of the technology involved, maintenance of quality control, ownership rights in improvements and innovations made by licensee, warranties and indemnities, technical assistance and confidentiality, sub-licensing and assignments, and termination.

On the whole, there are few legal and administrative requirements governing the field of licensing in Australia. Exclusive licenses of patents, copyrights and other statutory rights require compliance with certain minor formalities. The Trademark Act of Australia provides for the registration of licensees (or ‘users’, as they are called in the legislation).

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