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BioEntrepreneurship: Ownership and Inventorship Issues


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Strong patent protection is essential for a start-up biotechnology company and can be a valuable company asset. However, it is also expensive, with costs ranging from tens to hundreds of thousands of …

Strong patent protection is essential for a start-up biotechnology company and can be a valuable company asset. However, it is also expensive, with costs ranging from tens to hundreds of thousands of dollars over time. This session will focus on how to get the most out of your patent dollars.

This session presentation is available in audio format here:

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  • 1. MaRS Event Series, BioEntrepreneurship-Intellectual Property Strategy Ownership and Inventorship Issues •Anita Nador, Partner, McCarthy Tétrault LLP ( •December 4, 2006
  • 2. What Will We Cover? 1. Intellectual Property (IP) Ownership 2. Inventorship (Patents) 3. Best Practices
  • 3. Intellectual Property • Patents • Trade-Secrets/Know-how • Copyright (incl. moral rights waiver) • Trade-marks (incl. good will) • Others
  • 4. Why Is Ownership Important? • Want to make sure you have an asset that you can: • Use • Sell • License • Enforce against third parties • Otherwise extract value from (e.g. attract investors)
  • 5. Why is it Important? ! Ownership or license right is fundamental to any IP Agreement or financing. ! Minimal IP due diligence is to verify ownership/license rights.
  • 6. How Do You Gain The Right To IP? ! You created it (e.g., for patents - inventor or employer engaging other!s to create). ! An assignment gives you all of the legal title and right and interest in the IP. ! In a license, the IP owner retains the legal title, but leases all or part of the intellectual property right to you.
  • 7. Creation - Inventorship • For Patents, inventor is first owner unless there is an agreement or relationship to indicate otherwise. • Inventions developed “during the course of employment” are generally considered to be owned by the employer.
  • 8. Inventorship • In the steps leading from conception to patentability, the inventor(s) may utilize the services of others, who may be highly skilled, but those others will not be co!inventors unless they participated in the inventive concept as opposed to its verification. • Apotex Inc. v. Wellcome Foundation Ltd., [2002] 4 S.C.R. 153
  • 9. IP Inventorship/Ownership Inventorship is distinct from ownership. ! Inventorship is distinct from authorship. ! Inventorship not determined by contract. It is ! governed by patent law of each jurisdiction. Ownership can be determined by contract. !
  • 10. Beware of Joint/Co-Ownership Provisions Canada United States Can dilute “quid “of other co- Cannot dilute “quid” of ! ! owner. other co-owner. Each co-owner can license Each co-owner can work the ! ! right or assign to more than invention themselves and one assignee without can assign their entire right consent of other co-owner to one other but cannot or accounting to other co- license right or assign to owner. more than one assignee Absent agreement to ! without consent of other co- contrary, all co-owners must owner or accounting to be party (plaintiff) to other co-owner. infringement suit Ethicon Inc. v. United States ! Surgical Corporation 135 F. Forget v. Specialty Tools of ! 3d 1456 (Fed. Cir. 1998) 35 Canada Inc. (1992), 48 USC 262. C.P.R.(3d) 323, aff’d(1995), 62 C.P.R. (3d) 537 (B.C.C.A.)
  • 11. IP Due Diligence - Ownership • Identify all parties involved with or having access to business/IP development. • Make sure you have agreements and procedures in place outlining their obligations to you. • EE, Confidentiality, Collaboration, Assignment, License Agreements.
  • 12. Academic Lab Funding Source Students/Post-Docs 3rd Party Academic Lab Technicians Collaborators (PI) University Collaborations University Policies
  • 13. Company Funding Source (Co.) (i) Consultants (ii) 3rd Party Funding Source Company Collaborations (3rd Party) (iii) Suppliers (iv) Distributors EEs
  • 14. IP Due Diligence - Ownership Check Title and Prior/Future Obligations and ! Encumbrances: quot; Assignments/Title on record in patent offices quot; Employee/contactor agreements quot; Funding Sources quot; Collaborations/licenses quot; Encumbrances: Liens/Securities quot; Ongoing IP Practices (CDAs, Invention Disclosures, Security Procedures)
  • 15. Major Points That Will Be Considered When Reviewing Agreements # Field & Scope $ (Ownership/License/CDA) 2. Termination provisions: Termination triggers (licenses, CDAs) Contract termination procedures and survival clauses (EE, CDAs, licenses)
  • 16. 1. Field & Scope Sole ! Exclusive ! Non-Exclusive ! Territory ! Subject Matter !
  • 17. 2. Termination Triggers ! Representations and warranties ! Deliverables / milestones ! Bankruptcy ! Events upon termination !
  • 18. 2. Termination Events Upon Termination ! Return of all IP rights ! Return of all material / confidential information ! Cease and desist activities ! Final reports, payments, other deliverables ! Survival provisions (e.g. confidentiality)
  • 19. Components of IP Provisions of EE Agreements • Grant Clause • Consideration • May have description of Employment. • Confidentiality Clause • Representation that EE not using prior employers IP or other IP in contravention of ongoing prior obligation. • Termination and Survival Clauses: Ongoing obligation regarding Confidentiality and Not Use Your IP for benefit of future ERs without consent.
  • 20. Confidentiality Agreements • Definition of Confidential Information • Duty to maintain information in confidence • Limited generally accepted exclusions • Optional publication clause (if dealing with academic institution, likely required. For company EEs, do not provide publication clause).
  • 21. Best Practices • Implementation of Internal IP Management Systems • Inventory of IP Assets (current and potential future IP) • Adoption of internal IP practices to identify and maintain control over IP: • Security Procedures • Confidentiality • Assignments/Licenses
  • 22. Best Practices • Inventory and monitoring of 3rd parties Company/Academic Lab is involved with: • Education • Communication • Compliance • Internal Database: • Diarize action point due dates • Sort by type of agreements/parties • Contact people (internal/external)
  • 23. THANK YOU!