R&D agreement
A fashion label develops a fabric made from recycled fishing nets with a weaving mill. A furniture designer has a factory work out the construction of a stackable chair up to prototype stage. For a jewellery brand, a tech company builds an app in which customers put together their own ring. Both sides put time, money and know-how into it, but who owns the result often only becomes clear once the product takes off and one of the two wants to have it made elsewhere.
In an R&D agreement you set out in advance who will own what you develop, what stays confidential and who may produce and sell the result. Without those arrangements, Dutch law decides. And it gives a different answer for each right.
Starting a development project or is there already a draft from your partner on the table? Call 020 675 88 21 or get in touch. You will have a reply within one working day.
Who owns the result if you agree nothing
Under copyright law the author is in principle the owner. If a manufacturer works out your design from your drawings and under your direction and supervision, you remain the author (Article 6 of the Dutch Copyright Act, in Dutch). If the manufacturer adds creative choices of its own, it may become a co-author.
For the appearance of a product, the Benelux has a rule of its own. If a client commissions a design for use in trade or industry, the client is treated as the designer in the Benelux and also acquires the copyright in that design, unless the R&D agreement provides otherwise (Articles 3.8(2) and 3.29 of the Benelux Convention on Intellectual Property, in Dutch).
The EU design, which applies throughout the EU, has no such rule and gives the right to the designer. If two parties developed the design together, they also hold the right together (Article 14(1) and (2) of the EU Design Regulation). With the stackable chair, the Benelux design and the copyright can therefore end up with the designer while the EU design ends up with the factory or with both together. Tackling a copy in Germany then starts with the question of who is entitled to do so.
An invention follows rules of its own too, because the Dutch Patents Act has no rule for clients. If two parties work together on an invention under an agreement, they are jointly entitled to the patent (Article 13 of the Dutch Patents Act 1995, in Dutch). Read under design law and assigning copyright how to register or assign such a right afterwards.
Owning a design together: what the law then says
Joint ownership feels fair, but it means you need the other party for every major decision. A jointly held copyright or design right is governed by the rules on co-ownership in the Dutch Civil Code. Your shares are then equal, unless your relationship implies otherwise (Article 3:166(2) of the Dutch Civil Code, in Dutch). You manage the right together, including its normal exploitation (Article 3:170(2)).
A licence to another brand or production at a new factory thus becomes a decision you cannot take alone. If you cannot agree, the subdistrict judge can lay down arrangements at the request of either party (Article 3:168(2)). Against a copy, however, each of you can act independently as far as copyright is concerned (Article 26 of the Dutch Copyright Act, in Dutch).
Dividing the result by application often works better. The label gets the fabric for clothing and bags. The mill may sell it to furniture makers. Or the brand becomes the owner and the manufacturer gets a licence for one application outside fashion.
Background know-how and new results in an R&D agreement
Each party brings something that already existed. The brand contributes earlier designs and its own name, the factory its own machines, recipes and methods. List what each party contributes in a schedule to the R&D agreement. That stays with the party that brought it in. The other only gets the right to use it for the project.
Then you set out what happens to what is added during the project. This is where interests clash most often, because an improvement to the product and an improvement to the production process sit in the same prototype. A factory wants to be able to use a smarter seam or a new bonding technique for other clients too, but a brand does not want its chair to turn up next year with another logo at a competitor. A common split gives improvements to the product to the brand and improvements to the process to the factory, with a right of use for the other.
If you have an app or other software developed, sort out the source code as well. Without an assignment, the copyright in the code stays with the developer. Read what that means in copyright in the source code of bespoke software.
A non-disclosure agreement (NDA) before you show the design to a manufacturer
The first meeting with a factory is often already about drawings, materials and a sample. So sign the non-disclosure agreement before that meeting, not weeks later together with the R&D agreement. An idea as such is not protected. Your sketches and your list of suppliers can be a trade secret, but only if you have taken reasonable steps to keep them secret (Article 1 of the Dutch Trade Secrets Protection Act, in Dutch). An NDA is one such step, as is a folder marked confidential and a small group of people allowed to see it.
Write in the NDA not only that the factory keeps the information confidential, but also that it only uses the information for the project. Use outside the project then becomes unlawful (Article 2(2) of the Dutch Trade Secrets Protection Act). If a factory arrives at the same thing independently, it does nothing wrong. Anyone who lawfully holds a prototype may also take it apart to see how it works, as long as no agreement restricts that (Article 3(1)(a) and (b)). If you lend out a sample, prohibit that expressly.
For your design, an NDA has another advantage. Showing a design to a factory in confidence does not count as disclosure (Article 7(1) of the EU Design Regulation). For the EU design, your design then stays new and the periods for filing do not start to run. Under protecting a clothing design you can read how those periods work. For an invention an NDA matters even more, because anything made available to the public before the patent application, even orally in a conversation, counts as prior art (Article 4(2) of the Dutch Patents Act 1995, in Dutch).
Want an NDA drafted before your first meeting with a factory? Call 020 675 88 21.
Who may make and sell the product after the development stage
After months of work on a prototype, a factory usually expects the production orders as well. Because the brand wants to stay free to order later from a cheaper or larger factory, you agree whether the factory gets a first right to production, for what period and at what price. If you opt for exclusivity, limit it to a territory or a number of seasons.
If the factory or the development partner becomes the owner, you get a licence to use the result and set out for which products, in which countries and for what fee. A fixed amount per item works differently from a percentage of turnover. You can read more about those choices under the licence agreement.
Don’t forget the prototype and the samples. You’ll want to take them with you if you later move to another factory.
If development stalls or a party pulls out early
Because by no means every project leads to a product, a development partner usually promises effort rather than a working result. Build in decision points, for example after the first prototype and after the pilot run, at which either party can stop without that counting as a breach.
Also decide what happens to a half-finished result. Set out whether the brand may continue with another factory on the work already done and whether the factory is paid for its hours if the brand pulls out. If you leave this open, you discover at the end of the collaboration that neither of you can move on without the other.
Developing with a competitor can fall under the cartel prohibition
If you develop with another label or a brand that sells the same products, you are working with a competitor and the collaboration can fall under the cartel prohibition (Article 6 of the Dutch Competition Act). A European block exemption leaves room, as long as your combined market share is no more than 25% when the agreement is concluded (Article 6(1) of Regulation (EU) 2023/1066).
Each party must then have full access to the final results, including the intellectual property rights and the know-how, for further research and for exploitation (Article 3(2) and (3)). A split in which one label gets everything and the other nothing does not fit. The exemption applies until 30 June 2035 (Article 13).
A lawyer to draft or review your R&D agreement
We find that designers and brands often only think about a contract once the prototype is standing there. By then the factory has already seen the drawings and dividing the rights has become a negotiation. We draft the NDA before the first meeting and write the R&D agreement that fits what you are going to make together. If your development partner has already sent a draft, we go through it with you and tell you where there is still room.
Want your R&D agreement drafted or reviewed? Get in touch or call 020 675 88 21.
