Your company wants to develop a prototype directly with or even specifically for a business partner. Or your company has already developed a new machine or written new software and now wants to test one or more prototypes together with business partners or deliver them to potential customers as test objects.
Depending on which phase your company is in regarding a prototype, different legal aspects have to be considered. In this blog post we will highlight the test phase of an already developed prototype.
Once you have completed your prototype, you will usually start a test phase as the next step. If the testing is done exclusively internally in your company, i.e. by the employees of your company, there are no major legal problems, since your employees provide this service within the scope of their respective employment contracts. However, companies often want to test their prototype with external partners or have it tested by external partners. Especially potential customers can be exciting partners for the testing phase of a prototype.
When testing with external partners, the following legal aspects should be considered in particular:
When working with external partners in the test phase, it is first important that the performance obligations are precisely defined by you and the external partner. How many employees and how many hours should a prototype be tested? Which aspects should be tested? In which environment (e.g. temperature for climate sensitive products) should be tested? How should the results of the tests be presented? All these aspects should be defined and recorded in writing.
In some cases, the testing is also carried out against payment, in which case the corresponding payment obligations must also be recorded.
Liability for failed tests
An important aspect of testing is the question what happens if something goes wrong during testing. On the one hand, damage can occur to the prototype itself, and on the other hand, a faulty prototype can cause damage to the testing company. The demarcation of the respective responsibilities must be clarified. Especially when a prototype is to be tested for the first time, this aspect requires a lot of attention.
Rights to the test results
It is also important to clarify to whom the test results belong and who may use the test results for what purpose even after the tests have been completed. Since it is often unclear how the test phase will proceed, it may also be useful to keep the test results secret for a certain period of time.
Rights to possible improvements or ideas for improvements
Since the prototype was already created before the test phase, it is basically clear who owns the rights to the prototype and the associated intellectual property rights ("Intellectual Property Rights", "IP", in particular patents or copyrights for software). However, it is not uncommon for ideas for improvements to the prototype to emerge during testing. It must therefore be clarified when the rights to these ideas belong. As the owner of the prototype, you should try to make sure that all improvements belong to you.
Do I need a contract for the testing phase at all?
Depending on the scope of the tests to be carried out and especially if larger sums of money are paid, a contract is useful to avoid uncertainties.
As soon as there is a risk or chance that new intellectual property rights may arise during testing, a contract is even essential, since otherwise you as the owner of the prototype may be prevented from using the improvement.