Using this information you can quickly prioritize patents that claim a process or workflow system-level over patents which are based on circuit-level details. Prior art references shared during prosecution file wrapper history and prior-art searches provide an insight of potential competitors or companies which can be a threat in the future. Dates that need to be checked include priority dates, expiration dates, renewal dates, etc.
Geography: The jurisdictions being covered by the patents, and their family members in the portfolio. Mortgage on the portfolio : Sometimes, patent owners take loans from banks keeping their IP assets as a mortgage. If not checked, a buyer could end up repaying the loans. Litigation Status: If the patent was subject of or to any litigation. Also, find out the end results of the cases, were there any settlements involved or any other agreements related to the case that should be checked.
You can check if any of the family members are still in the prosecution phase, as it can be used to strategically amend the application. For example, if a patent application has claims in similar lines to a product available in the market and if the patent has a priory date earlier than that of product or seeks priority date from an older application which is before that of product date, it can be used to amend the claims or to file CIP application which can have claims crafted in way which overlaps with the features of the product.
Check related terms and conditions like technology transfer details, royalties, etc. Check the terms of licenses. Your source for expert commentary on IP management issues. Go to the blog.
Bobrowicz D. A Checklist for Negotiating License Agreements. Available online at www. D Bobrowicz. Sharing the Art of IP Management : Photocopying and distribution through the Internet for noncommercial purposes is permitted and encouraged. Editor's Summary, Implications and Best Practices. This chapter provides a road map for licensing professionals to identify the most common terms, contractual obligations, and other provisions that are likely to be encountered in crafting a license agreement.
Emphasis is placed on agricultural technology licenses. Since most people engaged in deal making are involved in multiple deals at the same time, important aspects can be forgotten or overlooked at any time and for any deal. While expansive, it does not necessarily fit all contexts and is therefore intended to serve as a basis from which institutions and individuals can develop their own checklists.
A checklist to aid in negotiating a licensing agreement, much less to aid in actually preparing and writing the agreement itself, may sound like a simplistic tool to an experienced negotiator or contract attorney. After all, most people in such positions are well educated and used to dealing with multiple projects having many details in the scientific, legal, and business arenas, all at the same time.
If they did not have the competence to deal with this type of work situation, they would not last long in the active, high-pressure licensing environment. But it is precisely because of myriad details that a checklist can be life or deal saving for the working licensing officer or attorney. One of the simplest ways to make sure that a crucial or costly mistake does not happen because of an oversight is to use a tool such as the checklist presented here.
This section introduces and discusses for both licensors and licensees each element of the checklist. If your work requires you to draft license agreements, download the checklist from the online version of this Handbook where it is given without the annotations.
No more last-minute telephone calls or e-mails to get information that should have been exchanged at the first meeting. Some use of background information in a contract is recommended because within a short period of time after the deal is done and the agreement signed, negotiators memories will fade and a short set of statements regarding the background of the deal may become invaluable should the contract need to be interpreted by a court or an arbitrator.
A simple contract will not need to have a section devoted to definitions, as the definitions can be presented when special terms are first encountered. A complex document should present all definitions in one section for ease of drafting and later interpreting the contract.
General terms used throughout the contract should be placed in this section, as should technical terms that are used frequently. Either an alphabetical or a hierarchical order is recommended, the latter being used when a number of terms are closely related and having them near to each other would allow the reader to more easily navigate the agreement.
Each license will have its own specific set of definitions, so a short list that includes only the most commonly used terms is presented here. All other appropriate terms should be listed and defined. Clear definitions will add great clarity to a license.
Care should be taken to write definitions that, in general, stand alone and are not circular in construction. A good place to begin thinking about what to define is with a definition of the parties. If dealing with a company, is it the company and all its affiliates?
All of its subsidiaries? Or only the parent company? Licensee, sales, net sales, profit, territory, field, patents, patent rights, intellectual property, and nonprofit are examples of other relatively common terms, and there are many more. Once defined, these terms will usually appear, throughout the rest of the contract, with the first letter capitalized or in all capitals. The following sections may seem to be overkill to the licensing professional.
Therefore, the licensor may seek to include provisions requiring the licensee to:. Comply with export control laws.
Be responsible for all costs associated with compliance. Confidentiality Confidential information is often shared between parties to a patent license agreement, even if know-how is not included as part of the licensed subject matter. The agreement should therefore:. Define the scope of confidential information that may be shared by each party.
Set out procedures and requirements for handling that information. Representations and Warranties Each party will likely represent that it is an organization in good standing with the right to enter into the patent license agreement.
The licensee should also consider requiring additional representations and warranties from the licensor. For example, the licensee may seek the licensor's representation and warranty that:. Regardless of any licensor representations and warranties concerning the licensed patent, the licensee should:. Limitation on Liability, Indemnification, and Insurance Issues the licensee should consider include:. Disclaimers of liability to the licensor for consequential, incidental, and other special damages from all claims including breach of contract or tort.
Limitations on liability, such as a cap on damages. The extent of any indemnity obligations. Any insurance requirement the licensor imposes on the licensee to cover third party claims and any indemnity obligations. Term The primary concerns for the patent license agreement term include:. Whether the license term will extend until the expiration date of the last patent to expire under the licensed patents or a shorter period. How any royalty obligations are affected by the expiration in any country in the licensed territory of some, but not all, of the licensed patents during the license term see Royalties and Payment Terms.
Termination Consider the appropriate grounds for early termination of the license by each party. For example:. The licensee should consider seeking the right to terminate for convenience, giving it the right to terminate at its election, for example where the licensee:. The licensor may seek the right to terminate if the licensee, for example:. For more information concerning bankruptcy issues in intellectual property licenses, see Practice Note, IP Licenses and Bankruptcy.
Consider cure periods for certain breaches of the patent license agreement. Effect of Termination The patent license agreement should set out the parties' rights and obligations following expiration or termination of the agreement, including:. Sell-off rights and their duration. Requirements for the licensee's destruction of inventory and other materials. Requirements for each party's return of confidential information.
Provisions of the agreement that survive after expiration or termination. Assignment and Change of Control Typically a licensor seeks to restrict the licensee's right to assign the agreement but have no restriction on its own assignment rights. The licensee should:. Determine whether to seek the ability to assign its rights or delegate its obligations under the agreement to a third party or seek to restrict the licensor's ability to do the same or both.
Consider any restrictions on assignment, including whether assignment is subject to the other party's approval and whether that approval may be unreasonably withheld. In addition, the licensor may seek to restrict the licensee's ability to retain its rights under the patent license agreement if the licensee undergoes a change of control see also Termination. The licensee should consider limiting this restriction to situations where the licensee's change of control results in the agreement falling into the hands of a direct competitor of the licensor.
Due diligence refers how you research and investigate a licensee. You will need to research how they worked with other licensors and whether or not they have been involved in license agreement litigation in the past.
If so, determine the cause of the litigation and make a final determination based on those results. One thing to remember is that a licensee can also be a competitor, but the goal is a partnership.
Negotiation refers to dealing with any reason one or more in a party would want to change any aspect of a contract. You can use it to enforce or alter preset limits that you are willing to accept or reject regarding the terms of an agreement.
When writing a license agreement, you must ensure that it is specifically relevant to those involved in negotiating the terms.
The term definitions section of the agreement is crucial. It must be very clear and make sense even years into the future so that it can be easily interpreted.
In good faith, the agreement can include guaranteed royalties, which are those that need to be paid within a specified amount of time. It can also include a specific amount of money on marketing or research and development. This will demonstrate you effort to produce and sell your product per the terms in the agreement, particularly within an exclusive agreement.
The granting of a license is exclusive and provided to certain markets and territories in various countries. You will need to include those who are to be responsible for any product improvements, as well as who is charged with paying for product improvements.
Other terms that should be included in a license agreement include training and cooperation. You must also make all clauses and terms clear. Also, make sure you include what is and is not allowed within the agreement and under which conditions those allowances are permitted. You must also be sure to cover the march in rights.
A license agreement should have a licensor reservation, such as own or use.
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