Setting up a consortium: 6 essential legal tips

Contents

• Intellectual property
• Governance
• Financial management
• Conflict resolution mechanisms
• Compliance (competition law)
• Taxes

Intellectual property rights in consortium agreements

Exploring the world of consortium contracts? Discover the importance of intellectual property management in creating successful strategic alliances!

Collaboration is a powerful tool in today’s competitive landscape, and consortium agreements (CAs) are an excellent way for parties to work together, sharing resources and expertise. However, these consortium agreements can be problematic, particularly when it comes to protecting the intellectual property rights of each member. Here are some best practices for protecting intellectual property rights in consortium agreements:

Conducting intellectual property due diligence

Before concluding a cooperation agreement, a thorough intellectual property review should be carried out to identify and evaluate each member’s existing intellectual property assets (copyrights, patents, trademarks, know-how, etc.). This helps to clarify ownership and use rights and avoid potential conflicts.

Trading Clear IP

Negotiate and clearly define IP terms from the outset of the cooperation agreement. Ensure that all members understand and accept the clauses relating to ownership, co-ownership and licensing of IP. A precise definition identifies the economic rights (assignment, license and commercial exploitation) as well as the moral rights inherent in the works. The Board of Directors must therefore organize the distribution of rights between the partners right from the negotiation stage, for example by establishing rules of co-ownership or, where applicable, by providing for the assignment or granting of licenses in the event of a need for valorization or subsequent commercialization.

Implement intellectual property management strategies

Develop and implement IP management strategies to protect IP throughout the consortium life cycle. This includes regularly monitoring the use of IP, keeping detailed records of each member’s IP contributions, and continuously updating IP protection measures as necessary.

These strategies should also include proactive measures to identify potential intellectual property risks and address them promptly, ensuring that the rights of all consortium members remain protected, for example by

• Assign clear responsibilities for IP management to specific individuals or committees: these specific arrangements help maintain accountability and streamline the process of protecting and commercializing IP.
• These specific provisions, which establish protocols for reporting and dealing with intellectual property infringements or unauthorized use, will further enhance the security of the consortium’s innovative results.

Include confidentiality clauses

Establish guidelines for the publication and dissemination of research results and intellectual property developed within the consortium, and determine the publication approval procedure to prevent unauthorized disclosure of intellectual property.

Good Governance in Consortium Agreement

Are you exploring the world of consortium agreements? Discover the importance of good governance in creating successful strategic alliances!

Consortium agreement has become essential in today’s global business landscape. By forming strategic alliances, companies can pool resources, share expertise, and mitigate risks associated with large-scale projects. However, the success of these ventures relies heavily on the principles of good governance.

Good governance is paramount for the success of any consortium. It involves establishing clear and transparent processes for decision-making, accountability, and performance monitoring. Effective governance ensures that the consortium operates efficiently, maintains trust among members, and achieves its objectives.

Here are some best practices for governance:

Clearly state the objectives and missions

• Describe the objectives and missions of the consortium in a clear and concise clause.
• Ensure that all involved parties understand and share a common vision of what the consortium aims to accomplish. Establish performance indicators and evaluation methods to measure progress.
• Conduct periodic reviews to adjust strategies and objectives.

Define the roles and responsibilities

• Clearly defined roles and responsibilities help avoid misunderstandings and ensure that each member contributes effectively to the consortium’s activities.
• State the responsibilities of each member, including financial obligations, contributions, and intellectual property rights.
• Establish control and audit processes to ensure compliance with consortium objectives and standards.

Define the management structure

• Establish a governing board or committee, working groups, and specific roles of members, decision-making processes, including votes, consensus.
• Establish procedures for amending and modifying the consortium agreement to adapt to future changes.
• Ensure that all members have a voice and can actively participate in decisions.
• Implement procedures for conflict resolution to manage disagreements constructively by using contractual or judicial mediation when necessary.

Maintain regular communication

• Establish mechanisms for regular and open communication between consortium members to discuss issues, share updates, and coordinate activities.
• Organize frequent meetings and provide detailed reports on activities and finances.

By following these practices, consortium members can effectively protect their intellectual property rights and foster innovation and collaboration.

Let’s work together to foster strong, collaborative partnerships that drive innovation and growth.

Financing Mechanisms in Health & Biotech Consortium Agreements

In the healthcare and biotechnology sectors, consortium structures have emerged as critical vehicles for collaborative innovation. Whether for the co-development of advanced therapies, clinical trials, or large-scale R&D initiatives, these partnerships require carefully engineered financing mechanisms adapted to the sector’s risk profile and regulatory constraints. Unlike joint ventures, consortia do not constitute separate legal entities—hence, no equity financing in the strict sense—but the financial framework remains central to the success of the common project.

Initial Project Funding

The initial funding phase typically covers feasibility studies, early-stage research, regulatory filings, or preclinical activities. In pharmaceutical and biotech consortium, this funding is often structured as cost-sharing arrangements between industrial partners, research institutions, or public stakeholders (e.g., EU-funded programs). These contributions are contractually formalized, with precise definitions regarding eligible expenses, funding ratios, reimbursement conditions, and cost allocation keys. Particular attention must be paid to compliance with public funding regulations and IP ownership clauses.

Milestone-Based Tranche Financing

In clinical and biotech development, projects are highly dependent on predefined regulatory and scientific milestones. Financing is therefore commonly structured around tranche mechanisms, each conditioned upon the successful achievement of key deliverables—such as IND approvals, clinical Phase I/II results, or EMA/FDA designations. These milestones act as contractual triggers, enabling the staged commitment of financial resources while ensuring alignment between scientific progress and capital exposure.

Intra-Consortium Loan Contributions

As the project advances toward later-stage development or market authorization, members may opt to provide inter-party financing through shareholder loans or similar instruments. Such funding—often structured as shareholders’ funding or convertible notes—ensures continuity without altering ownership or governance balances. In biotech consortium, these contributions must be carefully documented, particularly when clinical trial liabilities or IP licensing are involved, to ensure traceability and avoid requalification risks under financial or tax regulations.

Accessing External Debt

Finally, external debt financing—though less common at the pre-commercial stage—can be mobilized once the consortium demonstrates technical validation and regulatory traction. Specialized lenders in life sciences (including venture debt funds or development banks) may intervene, subject to due diligence on IP portfolios, licensing arrangements, and revenue-sharing models. The presence of a strong consortium agreement and a tested internal financing framework are prerequisites to structuring such financings effectively.

A robust and phased financing strategy—starting with internal resource pooling, followed by milestone-aligned tranches and potential external debt—enables these ventures to navigate uncertainty while accelerating medical innovation.

Competition law in consortium agreements

A consortium is defined as a temporary grouping of two or more companies that pool their resources in order to carry out a joint operation. They are frequently used in calls for tender. Consortium agreements (CAs) must be examined under the rules of competition law. Here are the main points to bear in mind.

Determine the framework of the cooperation before any competitive analysis

It is important to determine the precise legal framework of the cooperation. Where the cooperation leads to the creation of a joint venture, it may fall within the scope of merger control – if it performs on a lasting basis all the functions of an autonomous economic entity and subject to certain turnover thresholds being exceeded. On the other hand, a cooperation arrangement governed by a CA will, a priori a priori of antitrust law, which is the subject of this analysis.

Identifying practices to be avoided in antitrust law

Depending on the type of CA, the main practices to be avoided in CAs in order not to fall foul of the prohibition on anti-competitive agreements may be as follows: concerted fixing of prices or margins, sharing of markets or customers, exchanges of commercially sensitive information other than that which is strictly essential to the purpose of the consortium, or limiting production or innovation. Beware also of excessive exclusivity or non-competition clauses.

This list is not exhaustive, and a precise competitive analysis will be required before entering into a CA. This analysis will differ depending on whether the parties to the CA are (current or potential) competitors or non-competitors. Depending on the outcome of this analysis, solutions could be put in place where appropriate, such as clean teams or effective confidentiality rules.

Determining the applicable exemption regime

A CA, particularly insofar as it includes an element of economic rationalisation, may qualify for the benefit of the block exemption, if certain conditions are met (in particular the market shares of the parties to the CA), so that it will not be prosecuted on the grounds of an anti-competitive agreement.

In practice, depending on its purpose, the CA could, for example, fall under Regulation 2023/1066 in the case of cooperation in research and development.

Determining whether there is a risk of abuse of a collective dominant position

Depending on the circumstances, a CA could serve as a vehicle for an abuse of a collective dominant position if it is used to foreclose a market or drive out competitors without objective justification.

A collective dominant position is established when the undertakings in question together have the power to adopt the same course of action on the market and to act to an appreciable extent independently of other competitors, their customers and, ultimately, consumers. This presupposes the existence of a collective entity and whether that entity holds a dominant position on a defined relevant market.

Cases of abuse can be wide-ranging, such as predatory pricing, discriminatory practices or exclusionary research and development.

It is therefore important to determine whether the parties to the CA could hold a collective dominant position in order to avoid possible abuses if this is the case.

Let’s work together to foster strong, collaborative partnerships that stimulate innovation and growth.