Negotiating a Joint Development Agreement (JDA): Key considerations for technology entrepreneurs

For many growing technology companies, entering a Joint Development Agreement (JDA) is often the first formal step toward commercializing their innovations. These agreements are particularly common where a startup has developed enabling technology that requires further adaptation, integration, or customization before it can be launched to market – often in collaboration with a larger, international commercialization partner. 
 

This article aims to provide entrepreneurs and executives in growing technology companies with insights into negotiating JDAs effectively. 
 

Understanding the framework of a JDA 
 

At its core, a JDA sets out the framework for how two or more parties, typically a tech startup and a larger industry partner, will collaborate on developing a product, technology, or solution. The agreement usually defines: 
 

• The scope of the joint development project 

• The roles and responsibilities of each party 

• The timeline and milestones 

• Funding and resource commitments 

• How the results (including IP) will be used or owned 

Importantly, while JDAs pave the way for commercialization, the actual commercial terms (e.g., pricing, license terms, distribution rights) are usually negotiated later, after the success of the joint development effort can be assessed. 
 

Exclusivity and Right of First Refusal (ROFR) 
 

Exclusivity is often a key issue in JDAs. During the joint development period, it’s common for the parties to agree to work exclusively with each other on the particular technology or project. This exclusivity creates a secure environment for cooperation and ensures both parties are aligned in investing resources and know-how. 

However, exclusivity can be a double-edged sword. If it’s too broad or long-lasting, it may prevent the startup from pursuing other valuable opportunities. Exclusivity can be structured in different ways: 
 

• Mutual exclusivity: Both parties agree not to work with others on similar developments during the project period. The exclusivity under the JDA may also extend over the term of the joint development project period to provide platform and incentives for the parties to negotiate the commercial terms. 

• Right of First Refusal (ROFR): One party (often the commercialization partner) is given the right to match any third-party offer related to the developed technology before the other party can accept it. 

Choosing the right structure depends on your goals. A mutual exclusivity arrangement can create stronger commitment but may be risky for a startup if the future commercial deal falls through. A ROFR provides some flexibility but may reduce the attractiveness of your technology to potential third parties. 
 

Intellectual property rights (IPR) allocation 
 

One of the most challenging aspects of negotiating a JDA is the allocation of intellectual property rights (IPR). The JDA must clearly define who owns and controls both background and foreground IPR. Background IPR refers to the pre-existing intellectual property that each party brings to the table, while foreground IPR pertains to the new intellectual property developed during the joint project. 
 

Typical solutions for IPR ownership 
 

There are several common approaches to allocating foreground IP: 
 

1. Sole ownership: One party owns the foreground IP, usually with the other party receiving a license to use it. 
2. Joint ownership: Both parties co-own the IP, though this can lead to complications around enforcement and licensing. 
3. Division by field of technology or applications: foreground IP is split based on agreed criteria, such as technology domain or applications area. 
    

A key consideration here is the balance between maximizing IP rights and maximizing freedom to operate (FTO). For a startup, owning more IP might seem advantageous, but in practice, having a clear, unrestricted license to use the jointly developed technology in your target domain can be even more valuable. It allows the company to build commercial products without future legal uncertainty. 
 

Looking ahead 
 

The JDA is not the end goal, but a stepping stone to future commercial cooperation, such as manufacturing, supply, or licensing agreements. However, the commercial terms for this next phase are usually not finalized at the JDA stage. As such, the way exclusivity and IP rights are structured in the JDA will heavily influence your negotiating position later. 
 

The promise and risks of JDAs 
 

The promise of a JDA lies in the potential for successful future commercial cooperation with the partner. However, the risks are equally significant, particularly if there are mistakes in negotiating exclusivity or IPR clauses. Entrepreneurs and executives must approach JDA negotiations with a clear understanding of their goals, the potential benefits, and the risks involved.