The UK is already home to Europe's largest independent electronics design industry, representing almost 40% of Europe's independent design houses. However, this industry consists largely of small companies. For such enterprises, whose ability to keep abreast or ahead of developments may be constrained by resources, the UK Department of Trade and Industry's 2003 Innovation Review Report identified access to networks and sources of new knowledge as two of the most important determinants of business innovation performance. Because innovation is a complex process, success relies on the coming together of a variety of players, such as suppliers, customers, other firms, universities, research and technology organisations and other intermediaries. The Department has therefore set about setting up a Knowledge Transfer Network to provide businesses, research and technological organisations with the opportunity to network and share mutually beneficial information. As well as academic institutions, the network is intended to include companies working in design, manufacture and distribution of electronic devices and equipment of all kinds - semiconductors, materials, production, test and inspection equipment, components and scientific and technical instruments. It is to be a single national over-arching network to provide a range of activities and initiatives to enable the exchange of knowledge and stimulation of innovation amongst this community. The objective is to improve the UK's innovation performance by increasing the breadth and depth of technology knowledge transfer into UK-based businesses and by accelerating the rate at which this process occurs.

The specific objectives foreseen for the Electronics KTN include: identifying and addressing the opportunities and problems faced by the supply chain; obtaining market feedback from end-users to direct research and development in emerging technologies such as carbonbased electronics; and developing an 'electronics technology atlas', benchmarking the UK's research, design and manufacturing activities against competition worldwide and mapping out future technology and market developments. The network is also intended to form structured relationships with relevant UK and overseas institutions and networks to facilitate market access and wider collaboration, as well as developing national technology strategy. Partial funding of £3m is available over three years for the network to be established.

Given the objective of exchanging knowledge, and the public-private structure of the organisation, participants will need carefully to bear in mind the status of information which is either fed into or arises out of the network's operations. Unless the terms of any workshops or conferences are specified to include obligations of confidentiality upon all participants, disclosure of on-going research, forthcoming products or the finer details of production methods in such an environment may lead to the loss of both the opportunity to patent the results and the possibility of protecting them through the law of confidence. Advance submissions to such events may be reviewed by competitors acting in their capacity of peer-reviewer for the network, leading to ambiguity as to the constraints which may or may not apply to subsequent use of the information. Yet imposing strict terms as to confidentiality upon all participants would severely limit the value of the exchange of information taking place, and in reality is likely to mean that developments cannot safely be discussed until protected by patent application(s). Even with this precaution, the network may still provide early access to the information, since patent applications are not published until 18 months after filing.

The broad objectives of the network should also lead to an increase in collaborative activities, both between companies in the private sector and between public and private. From the legal perspective, effective collaborations require some of the most careful contractual definitions, which are rarely capable of a 'one size fits all' approach. The most basic issue is, what exactly is this project aiming to achieve:

• Remove a known limitation or weakness of an existing product?

• Extend existing product range into new application?

• Develop an entirely new product to meet known need?

Each of these objectives involves a different level of predictability/risk, and a contractual approach which reflects that difference. Anathema though it may be to the tidy legal mind, no agreement is likely to be able to cover all the angles of a relatively open-ended project in a legally watertight fashion. In some cases, the best that can be achieved is an agreement which recognises each party's contribution and expectations and apportions the benefits fairly between them on that basis.

It is essential to define the technical background and foreground of the project at the outset, so that the question of ownership and other interests in any rights arising from the project can be addressed and reduced to writing before the work starts. Ownership of the IP arising does not have to be exclusively one party or the other's; it can be split among the different parties, for example with rights in one field belonging to one side and those in another to the other with cross-licences being used to ensure that all parties have the right to use any IP they do not own, at least so far as is necessary to enable them to exploit their own. The result can be complex - but is better than leaving the issues to be fought over once a valuable product has arisen and the parties' interests are diverging. Joint ownership, although apparently a temptingly simple solution, is a trap for the unwary: joint owners have to continue to act jointly in all forms of exploitation of the rights other than in-house manufacture.

Structural issues also need to be considered. Collaboration may take a range of forms, from full-scale formal joint ventures, with shareholders' agreements setting out the rights and commitments of the parties, through to arrangements where in practice one party is expected to do most of the research with only selected inputs from others. Absent some written definition, there is a risk that the parties may find their collaboration falls within s1 Partnership Act 1890, with consequences probably unintended by any of them.

Finally, the participants in the network need to bear in mind the competition issues arising from all of their activities, both within the network itself and in collaborations arising out of it. Allegations of collusion have arisen in other industries from such seemingly innocent events as the attendance of a particular industry group at a commercial seminar; a network of interest groups may be that much more vulnerable to the same kind of perception.

The process of establishing the network is now in progress, leading to an interview and selection process amongst applicants in the spring of 2006.