Background
The UAE and its emirates have for some considerable time been planning and building for a future where oil production can no longer be relied on as the primary source of national prosperity. The future economy of the UAE and the operation of its towns and cities will rely heavily on renewable resources and technologies.
In furtherance of these goals Government initiatives have focused on attracting the biggest and brightest companies, educational and research institutions and minds to the UAE via international collaborations and development of facilities. Such initiatives have involved the creation of science and technology parks, technology and company incubators and accelerators and programs.
One such notable example is the initiative of Masdar City in Abu Dhabi; the world's first carbon neutral, zero waste city to be completely powered by renewable energy. Masdar City is under active construction and tenants and partners are being recruited.
Legislative initiatives by the Federal government and local governments in various emirates are also supportive of a willingness to foster entrepreneurship in the UAE. Recently the UAE Government amended the Commercial Companies Law by reducing the minimum capital requirement for a company on incorporation from AED 300,000 in Dubai and AED 150,000 in Abu Dhabi to a requirement to simply to have a share capital appropriate for achieving the company's objectives. Further initiatives are in the pipeline to help reduce compliance costs and barriers to entry in the market.
Abu Dhabi University also recently announced the launch of an Entrepreneurship Centre aimed at facilitating innovation and growth for new businesses in the UAE.
The recent announcement that Masdar City would be the interim headquarters for the International Renewable Energy Agency is evidence of the UAE's determination and commitment in this area and will further foster the development of renewable energy and technology in the UAE.
Whilst this Brave New World will be built physically, its foundations and success are very much based on the creation and exploitation of intangible intellectual property.
Development of Intellectual Property ("IP")
The research, development and commercialisation of new IP inevitably involves working with one or more partners. These partners need to agree how their relationship will work, what each party will contribute and how they will share the fruits of their efforts.
Issues that commonly arise in joint research, development and commercialisation projects
Whether you are an investor, a start up company, an inventor or an educational or research institution the following issues need to be considered and dealt with by way of appropriate legal arrangements and registration, as appropriate.
IP ownership and rights of use
Will 3rd party IP be required to develop the Project? Can the rights to use such 3rd party IP be secured at the outset?
What 'background IP' is each party bringing to the Project? Will the background IP be transferred to the Project, or will the Project otherwise be granted rights to use it?
How will 'foreground IP' developed in the course of the Project be owned (and registered, if required) and licensed? Will a separate legal entity be established to own foreground IP and license it to the participants? Will one party own it and license others to use it?
Will the foreground IP be used directly by the parties, or is it to be licensed to third parties? On what basis will such licensing be undertaken?
What systems and contracts will be put in place to document, record and protect IP? What restrictions will be imposed on publication of research and Project progress reports?
Other Issues
What is the appropriate legal structure for the Project (e.g. a separate legal entity? solely contractual arrangements?)
What is each party's contribution to the Project in terms of resources, staff and capital? Will all the parties be exclusively devoted to the Project? If not, should minimum contribution/time requirements be put in place? Should non-compete provisions be put in place?
Is there sufficient capital available to fund the business plan? In what circumstances can a 3rd party/funder be bought in? What is the exit strategy for the venture/parties?
How will any key people be secured for the duration of the project?
How will decisions be made concerning the venture, and on what basis?
How will the products generated from the development be commercialised?
Commercialisation Stage
Once the results of the research and development are known and potential products and services identified, the commercialisation strategy needs to be revisited to verify or determine the best route to commercialisation. It may be appropriate to create a product/ commercialise the research via the existing entity or via licensing arrangements with third parties, joint ventures or associations with third parties, or via a separate spin out company.
Summary
Federal and local government initiatives in the area of green and renewable technologies offer tremendous opportunities for international, UAE and GCC companies, institutions and entrepreneurs. Success in this area depends not only on creating new science, technology and innovative ways of using existing science and technology but also getting appropriate legal arrangements in place to exploit such development. An appropriate legal structure and robust contractual arrangements between the partners and around the protection, ownership and use of intellectual property are essential to ensure investors and developers of the technology, obtain just rewards for their efforts in the Brave New World.
By John Dennett & Marwan Andraos - Abu Dhabi Office
© Al Tamimi & Company 2009
