A summary of terms that should be included in licence agreements. Presented at an ASEAN-USPTO Program on Technology Transfer in Bangkok, Thailand, July 2, 2009.
2. Many examples of licenses and
agreements available
Actual form of clauses not important,
content is
Clause by clause review doesn’t deal
with language but the concepts
3. Business Terms - Use of a
term sheet or Memorandum
of Understanding
Reviewing the first draft
Associated Documents
4. Not legally binding
Statement of
background and
intentions
Good place to identify
problems such as
conflicts of interest
5. What should be defined; avoided
Capitalize defined terms
External references to other material
Consistency among agreements
Reference appendices for variable
information
Watch for ‘cut and paste’ definitions
6. Exclusive versus non-exclusive
Transferable versus non-transferable
Field of use / Territory
Right to sublicense
Use of Technology
Grant of License to an affiliated
company
Cross-licensing
Improvements
7. Reservation of certain rights by the
Licensor
Non-commercial purposes
8. Right to Sublicense
Control over Sublicensing
Approvals: consent versus notice, timelines
Flow through provisions: indemnity, royalties
What happens in the event of default of the
head licence (comfort letters)
End licenses (often attached as an
appendix)
Obligation to submit copies of licences
9. Fully paid up Licenses
Royalties based upon gross,
net or product sales
Royalty “reach through” on sublicences
Minimum royalties (creditable?)
Milestone payments
Interest on over-due amounts
Stacking provisions
Abeyance of payment pending results of
infringement action
10. Management may pass from licensor to
licensee over time
Issues of control, report, consent and
abandonment
Who pays?
Who is the assignee?
Obligation to mark or label licensed
products
11. Use and scope of an indemnity
Limitation on amount of claim
12. Who wants them
Who should give them
What does a Licensor warrant?
› Different types of licensors
› What can you actually control?
Ownership; non-infringement
Disclaim technology “fitness for purpose”
13. Permitted circumstances of disclosure
What constitutes “confidential
information”
Importance of confidentiality for trade
secrets or know-how
14. Report of activities with respect to
exploitation of the technology
Frequency
Right to audit
Accounting
standards
15. Term of the license
Events of termination
› Automatic (insolvency)
› Curable breaches
Termination process
Consequences to sub-licensees of
terminating the head licence
16. Public liability or product liability
insurance
Absolute need for both in most
circumstances
Indemnity vs. Insurance
17. Proper law of the contract
Attornment clause