Home > Topics > Technology and Product Licensing > Licensing Agreements in Agricultural Biotechnology > Editor's Summary, Implications and Best Practices

Agricultural biotechnology (agbiotech) licenses are similar in many ways to other kinds of license agreements, but they have some unique elements that require special attention. This chapter begins, however, with attention to the usual “boilerplate” language that all license agreements share. It outlines the basic structures and concerns of all such agreements. As in any area, the process of creating a license agreement in agbiotech involves the precise definition of the property of interest, an articulation of the exact rights of the licensor and licensee in that property after the agreement is signed, and the ongoing rights and obligations of each party.

This chapter’s topic is license agreements. It explores the basic nature and purpose of a license agreement: the definition and transfer of certain property rights between two or more parties under a specified sharing of rights and obligations between those parties. A license is distinguished from a “sale” in that ownership of the property does not transfer but remains with the original owner. In a license, the owner, called the licensor, transfers certain rights of possession and use (but not ownership) to the recipient of those rights (the licensee).

As in any area, the process of creating a license agreement in agbiotech involves the precise definition of the property interest, an articulation of the exact rights of the licensor and licensee in the property after the agreement is signed, and the ongoing rights and obligations of each party. The elements of this process are defined in this chapter, and the attendant issues in agbiotech licensing are described. Preferred licensing methods are also suggested.

The chapter then turns to the singularities of agbiotech licenses, focusing on such issues as multiple property types that often cover a single technology and/or product, freedom-to-operate issues that drive anti-royalty-stacking provisions, philanthropic and humanitarian use clauses, and stewardship obligations. The chapter stresses the importance in agbiotech licensing of precisely defining the property rights contained in and transferred by the agreement. It also emphasizes the uniqueness of agbiotech licenses in regard to the concept of “field-of-use.” In agbiotech licenses, field-of-use is typically defined as a crop-type that may be broadly or narrowly defined.

The complex nature of agbiotech and its industry requires each license agreement to be unique, with special, built-in mechanisms that foster the mutual agreement of licensor and licensee. Still, such licenses do not have to be invented from scratch, and this chapter’s overview of licensing enhances our understanding of both the common and unique aspects of agbiotech licensing.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

• Philanthropic use should always be considered when staple crops in developing countries are involved in licensing. However, such provisions should not be used as a disguise for commercial-scale use.
• “Stewardship” generally refers to the ongoing oversight and guidance of the commercial development and dissemination of a technology. Typically, it stresses the importance of maintaining a licensor’s overall interests in sustaining the long-term use of transgenic crops and in sustaining research and technology advancement.

For Senior Management (university president, R&D manager, etc)

• The low profit margins typical of commodity agriculture naturally depress the royalty rates that a technology owner can expect. For similar reasons, the large upfront license fees more typical of pharmaceuticals are unlikely. Instead of large royalties, the licensee may provide the licensor of a genetic construct access to the licensee’s valuable germplasm for future transformations.
• Successful agbiotech products have a history of significant patent infringement litigation. Although litigation is generally undesirable, it may be unavoidable. Agbiotech licenses should contain enforcement and litigation provisions that are designed with this eventuality in mind.
• The “freedom to operate” issues produce complexity that often results in difficult and drawn-out negotiations.
• Well-qualified staff are necessary to be effective in this licensing arena.

For Scientists

• It is important to recognize as early as possible any problems that may ensue when many technologies with disparate owners are used in research and development activities.
• Although it is not your responsibility to resolve the conflicts mentioned above, make sure you document the origin of biological and other materials you use in your research and keep a comprehensive record.

For Technology Transfer Officers

• As in any area, the process of creating a license agreement in agbiotech involves the precise definition of the property of interest, an articulation of the exact rights of the licensor and licensee in that property after the agreement is signed, and the ongoing rights and obligations of each party.
• Multiple forms of property that can exist simultaneously in any one technology or product: including utility patents, plant patents, plant breeder’s rights (for example, plant variety protection [PVP], UPOV-based), and trade secrets.
• Licenses often contain obligations for the licensor. For example, the licensor may be obligated to provide a specified amount of biological material over a certain time period. Similarly, the licensor may be required to provide know-how, and/or access to proprietary data, documents, and related information.
• Temper the desire for increased license income with the knowledge that agricultural markets often cannot support significant returns on technology.
• Licensee agreements are contracts. Hence, a sophisticated, solid, thorough and practical understanding of contract law will be fundamental to negotiating and drafting good license agreements. Build capacity in contract in your office; it will pay off in the longer term.