2. What rights can be licensed?
O Patents/patent applications
O Know-how (confidential information)
O Copyright
O Unregistered design right
O Registered designs
License : Exclusive/Non-exclusive/ Sole
3. O Patent License v. Technology License
The reality of patent power in the business world is limited,
it’s the technology or the know-how which is the strongest
asset.
Patent is the legal right to prohibit others from using only a
part of the technology covered by claims. Technology is
“what you know” – methods, materials, skills, designs,
inventions, formulations, algorithm, specification.
Patent granted could be limited in scope because of similar
features disclosed by existing patents.
Royalty would be given for products made by using any of
the technology, regardless of whether it is covered under
patents. (70% 30 %)
4. IMPORTANT ISSUES
O Parties to the agreement : whether subsidiary
companies to be considered a part of the licensee
company.
O Subject- Matter of the license: Definition of the
technology licensed and what use the technology
will be put to.
O Scope & Extent of rights licensed. i.e right to
make/use/sell/import/distribute/sublicense - Whole
or partial. Sublicense in the same or modified form?
5. Limits and Conditions
1. Exclusivity or non-exclusivity
2. Field of use – intended use or application, limited to a
particular market or for a particular territory to support their
business plan and commercialization strategy.
3. Improvements: Provision about the ownership and use
of ipr in improvements. One instance could be where
ownership belongs to the licensee but disclosed to the
other party with royalty free license to use.
If non-exclusive license, licensee usually not required to
provide improvements, if exclusive license, grant back
clause. Competition law prohibits the royalty free use of
severable improvements.
6. Payment
O Royalties (usually) or
O Lumpsome or Running fee
O Combination
O License issue fee
O Minimum annual royalty in case the licensee’s
performance goes down and milestone
payments.
7. Infringement
O Whether the licensor is to be under obligation to
bring infringement proceedings against third party
or merely to lend his name for the proceedings?
O Who will bear the cost of infringement proceedings?
O One arrangement could be that licensee brings the
proceedings and bears the costs and set them off
against the royalties.
O S. 109(2) Patents Act and S.61 Copyight Act
O If third party claim infringement, provision for
licensor to give no warranty that it will not infringe
someone else’s rights.
8. Term & Termination of license
O Term of the license – could last up to the duration
of IPR.
O Who will pay the relevant renewal fee?
O `License initially for a short period plus provision to
extend the license
O Provision for circumstances in which licensor can
terminate the license:
O Insolvency
O Serious breach of contract
9. Resolution of disputes
O The parties may agree that any disputes are to be
resolved by mediation or arbitration in place of
courts.
O In case of transnational license agreements, add a
choice of law and jurisdiction clause.
10. Competition Law
O Certain agreed terms may not be permitted by the
Competition Law.
i. If the terms have the effect of preventing, restricting
or distorting trade. – fine + agreement unenforceable.
ii. Tension between the patent rights and comp. law.
Iii TT Block Exemption Regulation in UK – exempt from
UK Competition Act but sets out a list of anticompetitive
acts.
Warranties & Indemnities
Corporate
Performance
Non-infringement
11. Recordal of Licenses
O In India, license must be recorded within 6 months
from the date of document.
O Licensee/Licensor to apply through Form 16 for
registration of his title – Section 69
O If requested by the patentee/licensee the terms of
the license may be kept confidential and
undisclosed except under the order of court.
