Licensing of Technology in IPR

IP
TECHNOLOGY
LICENSING TECHNOLOGY
KEY ATTRIBUTES
COMPONENTS

1. TOPIC: LICENSING OF TECHNOLOGY
Submitted By:
Adit Singla
Roll No. 21-M-AGRI-017
M.Sc. (Ag.) Agronomy
Submitted To:
Dr. Anand
Assistant Professor
Department of Agriculture
SAST, RIMT University
SUBJECT: AIPR-5221 INTELLECTUAL PROPERTY RIGHTS AND ITS
MANAGEMENT

2. Intellectual Property (IP)
•Intellectualproperty(IP)referstocreationsofthemind,suchas
inventions;literaryandartisticworks;designsandsymbols,namesand
imagesusedincommerce.
•IPisprotectedinlawbypatents,copyrightandtrademarks,whichenable
peopletoearnrecognitionorfinancialbenefitfromwhattheyinventor
create.
•IPisabroadconceptandincludesmanydifferentintangibleslike:
Patents(inventions).
Copyright(worksofauthorshipincludingtechnicalmanuals,software,
specifications,formulae,schematicsanddocumentation).
Tradesecrets(aprotectedformulaormethod,undisclosedcustomeror
technicalinformation,algorithms,etc.).
Trademarks(logos,distinctivenamesforproductsandtechnologies).
Designs(theuniquewayaproductlookssuchasacomputer’smolding).

3. Technology Licensing
•Licensingimpliesanagreementbetweenpartieswhoreceiveand
exchangeapproximatelyequalbenefitsandvalue.
•Technologylicensingonlyoccurswhenapartyownsvaluable
intangibleassets(IntellectualProperty),andhasthelegalrightto
preventtheotherpartyfromusingit.
•AlicenseisaconsentbytheownertotheuseofIPinexchangefor
moneyorsomethingelseofvalue.
•Technologylicensingdoesn'toccurwithoutIP!

4. License
•Eitherwesellthepatent/technologyoutrightorlicenseit,Iflicensed,the
licensorretainsownershipandtitleandthepowertoreversethelicensein
casethelicenseebreachesitsduties.
•Alicenseislessexpensiveforthelicenseewhilemoreflexiblein
providingsignificantsharedupsideifthetechnologysucceeds.
•Arecurringrevenuestreamcouldbeestablishedwithmultiplelicensees,
thatprovidespredictableincome.
•Licensingcouldbeawaytoincreasethechancesofmarketsuccessfora
newornascenttechnology(multiplegotomarketlicenseesbuyingaccess
‘affordably’).

5. Three Broad Categories of IP Licenses
•ALicenseforcertainIPrightsonly.Ex:Licensetopracticean
identifiedpatentortocopyanddistributeacertainworkofauthorship.
•Toreproduce,make,use,marketandsellproductsbasedonatypeof
technology.Ex:NewsoftwareproductthatIsprotectedbypatent,
copyright,trademarkandtradesecretlaw.
•ALicenseforalltheIPrightsnecessarytocreate.marketaproductthat
complieswithatechnicalstandardorspecification.Ex:agroupof
enterpriseshasagreedonatechnicalstandardtoensure
Interoperabilityofdevices.

6. Key Attributes of Licensing IP
Term,termination, releases,Performance,
records & reportingContract
Limitations
Geographical, Fieldof use.
Software,design,copyright,trade
secret,patent,trademark,music,
songetc.
What IP?
Payment Formula
Annual Minimum
RoyaltyRates
Rights
Licensed
Improvementrights;Rightsto
enforcepatents;Assignmentrights
Degree of Exclusivity
Non-exclusive,perpetual,exclusive.sole,
righttosublicense

7. Components of a License
1)Grant Clause
2)Consideration
3)Improvements
4)Transferability
5)Due Diligence & Reporting
6)Rights for Pursuing Enforcement
7)Termination
8)Dispute Resolution

8. Grant Clause
•Setsforthwhatpatentrightsarebeingconveyed.
•Thegrantcanbe:
Exclusive:Onlythelicenseehastherighttoexploitthepatent
rights.
Non-Exclusive:Thelicensorcangrantsimilarrightstoother
parties.
•Thegrantcanbelimitedbygeography(suchasU.S.,Asiaand
fieldofuse(suchasfortabletsbutnotcameras).

9. Consideration
•Thelicenseagreementtypicallyrequiresalicenseetopayan
upfrontlicensefeeaswellasongoingroyaltiesbasedona
percentageofsalesoronaper-unitbasiscanrequireannual
minimumroyalties(AMR)orminimumannualproductsalestobe
surethelicenseeisdiligentlymarketingtheproductsorservices
coveredinthepatentcanalsorequirethatthelicenseeprovide
reportstothelicensor,e.g.,ofsalesorrevenue,toensureaccurate
royaltypayments.
•AlicensormayproposethelicenseetakeoverthecostofIP
maintenanceinreturnfortherightsofenforcement.

10. Improvements
•Apatentlicensedefineseachparty'srightstoimprovementsof
thepatentedtechnology.
•Dependingonthenegotiation,Improvementsmightbesolely
ownedbythelicensor,licenseeorjointlyownedbyboth.
•Thepartywithmorebargainingpowerofteninsistson
controllingtherightstoimprovements.

11. Transferability
•Licenseagreementscanprovidethelicenseearight
tosublicenseorassigntheIP.
•Itisimportantforthelicenseetohavesomeability
toassignthelicensewithoutrestrictionorelseitmay
impacttheirbusinessunduly.

12. Due Diligence & Reporting
•Licenseagreementscanrequireduediligencebythelicenseetodevelop
and/orcommercializetheIP.
•SuchtermshelpensurethattheIPisusedandnotjustputontheshelf.E.g.
thelicenseecanberequiredtousereasonableeffortstodevelopand
commercializeproductscoveredbythelicense.
•Licenseagreementscanincludemilestonesthatmustbemetforthe
licenseetomaintainthelicense.
•Theycanalsorequiresubmissionofperiodicreportsofthelicensee's
activitiesrelatedtothedevelopmentandtestingandthesalesand
marketingprogressoftheproductscoveredbythelicensedIP.

13. Rights for Pursuing Enforcement
•Apatentlicensecanalsocontroleachparty'sresponsibilitiesfor
enforcingthepatentrightsalongwithapportioningliabilityifthe
licenseeissuedforinfringement.
•Dependingontheterms,anexclusivelicenseecanhavetheright
tosueforinfringement.Thelicenseagreementcandetermine
howthecostsoflitigationareapportionedbetweenlicensorand
licensee.

14. Termination
•Licenseagreementscanincludenegotiatedprovisionsthat
establishhowandforwhatreasonstheagreementcanbe
terminated.
•Clausesthatprovideforautomaticterminationofthelicense
agreementifonepartyseeksorisplacedunderbankruptcy
protectionmaynotbeenforceable.
•Butclausesthatprovideforterminationforfailuretopayroyalties
maybeenforceableregardlessofbankruptcy.

15. Dispute Resolution
•Licenseagreementscanrequirethepartiestoprovidenoticeofany
breachoftheagreementandcanspecifyperiodsduringwhichany
suchbreachcanbecured.
•Thelicenseagreementcanprovideinadvanceforarbitrationor
mediationofdisputes.E.g.Theagreementcanrequirebinding
arbitrationvs.litigation.
•Bindingarbitrationweakensapowerfullicensor'sabilitytopursue
criticalbreachesandhencewillnotbefavoredwhentheyperceive
theneedtocarryabigstick.