TopTop

Shadow

Search

advanced search
search help

 

ipHandbook Blog

Your source for expert commentary on IP management issues.
Go to the blog

 

About

Editor-in-Chief,   Anatole Krattiger

Editorial Board

Concept Foundation

PIPRA

Fiocruz, Brazil

bioDevelopments-   Institute

CHAPTER NO. 11.4

Krattiger A, J Dodds and D Bobrowicz. 2007. Potential Use of a Computer-Generated Contract Template System (CoGenCo) to Facilitate Licensing of Traits and Varieties. In Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices (eds. A Krattiger, RT Mahoney, L Nelsen, et al.). MIHR: Oxford, U.K., and PIPRA: Davis, U.S.A. Available online at www.ipHandbook.org.

© 2007. A Krattiger, J Dodds and D Bobrowicz. Sharing the Art of IP Management: Photocopying and distribution through the Internet for noncommercial purposes is permitted and encouraged.

Potential Use of a Computer-Generated Contract Template System (CoGenCo) to Facilitate Licensing of Traits and Varieties

Anatole Krattiger, Research Professor, the Biodesign Institute at Arizona State University; Chair, bioDevelopments-International Institute; and Adjunct Professor, Cornell University, U.S.A.

John Dodds, Founder, Dodds & Associates, U.S.A.

Donna Bobrowicz, Technology Transfer Specialist, Loyola University Chicago, Office of Research Services, U.S.A.

Show SummaryEditor's Summary, Implications and Best Practices

 

Please see the attached Read Me file for information about requirements related to downloading the CoGenCo database. The accompanying license agreement includes information about obtaining a copy of CoGenCo. By reading the license agreement, you agree to the terms and conditions related to using CoGenCo.

Abstract

Licensing between companies of both traits and varieties is routine, and there is no reason that it should be anything other than routine between companies and public sector institutions, as well. Some public entities struggle to gain experience in this area. This leads companies to shun negotiations and, even, discussions. Yet opportunities for the public sector to in-license traits (in the form of well-characterized and deregulated transgenic “events”) and varieties are vast and could lead to earlier access with respect to transgenic events (through backcrossing into local varieties) and to improved varieties for subsistence farmers. In order to improve the ability of the public sector to both in-license and out-license germplasm, a test version of a software program, the “Computer Generated Contract Template System” (CoGenCo), was developed. It aims to facilitate the exchange (or licensing) of commercial varieties by “walking” potential licensors and licensees though a systematic list of questions and tested parameters. CoGenCo is a pragmatic way of increasing the licensing of both finished varieties and germplasm containing transgenes for backcrossing, and its flexibility would make it especially suited for use in developing countries. This chapter explains the concept behind the software’s test version and leads the reader through its use. The authors very much welcome comments and suggestions about the software and look forward to collaborating with interested parties to further develop CoGenCo into a comprehensive and widely available system.

1. Introduction

The international agricultural-development community, the crop industry, and various advocacy groups disagree about how to transfer protected varieties and biotechnological inventions to developing countries. Yet everyone agrees that access to these inventions in developing countries should be improved and accelerated, either through donations or “open-source” licensing or through a variety of other strategies. But too often this goal is made complicated by too much industry in-crementalism, or by activist demagoguery. From a humanitarian perspective, such debates distract from the only focus that matters—the urgent need for farmers to access improved traits and varieties.

There is no reason that the licensing of germ-plasm and traits, particularly to meet the needs of resource-poor farmers in developing countries, need be more difficult than out-licensing for routine business purposes. Any plant-breeding company that does the latter—virtually all of them—considers out-licensing routine. Consider Holden’s Foundation Seeds, a company now owned by Monsanto, the sole revenue of which comes from the out-licensing of its foundation seeds. In terms of developing country licensing, however, most companies are reluctant to even enter into discussions, let alone negotiations, partly because many variables are unknown or little tested, and because few companies have any experience in this area. For these reasons, a small project was undertaken to develop a test version of a software program, the Computer Generated Contract Template System (CoGenCo).

2. What is Cogenco?

CoGenCo was designed to contribute to facilitating the exchange (or licensing) of commercial varieties by “walking” potential licensors and licensees though a systematic list of questions and tested parameters. The word commercial here is used because the licensor transfers commercial varieties primarily for commercialization in developing countries (following appropriate back-crossing, as necessary). Such commercialization may be in the form of donations, through national agricultural-research systems, or directly through seed companies.

CoGenCo is a concept proposed as a pragmatic way of increasing licensing of proprietary and finished varieties that may or may not incorporate proprietary technologies. Essentially, CoGenCo facilitates the awarding of out-licenses to developing country institutions, including germplasm from the Consultative Group on International Agricultural Research (CGIAR). Under the legally binding terms of these license agreements, several entities in a given country could compete against one another on price in poor (developing) countries but would not be allowed to compete against the patent holder in developed countries, where revenues and incentives for developing new varieties and new technologies would be undiminished. Under appropriate circumstances, the germplasm and/or traits could also be licensed royalty free. Such out-licensing separates these fundamentally different markets and promotes access to improved germplasm and technologies, all by reaffirming various statutory protections as indispensable for successful agricultural research and development.

The CoGenCo system, therefore, is aimed at establishing a certain international standard license. The more institutions use the CoGenCo template, the more the system becomes valuable. For this reason, we intend to make the CoGenCo system available for free once it is fully developed.

3. The Test Version

Based on discussions with several lawyers and licensing experts, we generated a basic license template. First, we developed a set of key variables and agreed on different options to choose from within defined ranges. A software engineer translated the concept into a “workable” software version that would provide a feel for what a finished product would look like. We selected Microsoft® Access® as the backbone of the system because it provides flexibility and easily expands into a version that can be used via a Web interface. Users around the world would thus be able to access the system without having to invest in expensive database software.

The primary objective of this test version was to see how different types of potential users would use it. The software allows for certain parameters to be adjusted. For example, for “humanitarian” licensing, a royalty of 0% could be specified, whereas for larger farmers, a sliding-scale royalty rate could be chosen. Depending on the option preferred, a different set of follow-up options will arise, such as liabilities, payment terms, auditing requirements, and so on. The software will be developed in such a way that individual users may customize the software. For example, they could include their own institutional standard language where appropriate. It could also eventually be downloadable from the online version of this Handbook.1

Figure 1 shows one of many screenshots that allow users to input various parameters and select from a range of options. For example, by selecting the tab License, the user is offered a screen that lists all the pertinent licensing details, including the territory (countries), and many more. The user basically walks through the different issues that should be considered in a license and is provided with one, two, or more options.

Figure 1: User Interface for the Specification of licensee, licensor, and license details

The software thus presents users with an interactive decision tree, which allows for multiple choices or user inputs. The key factors included are:

  • country
  • commodity/crop
  • technology
  • farm size
  • material transfer/reach-through clauses
  • farm income
  • import/export matters
  • cooperative farm issues
  • sliding scale for royalties
  • royalty stacking issues
  • warranties
  • liabilities
  • third-party distribution issues
  • farmer-seeds issues

For example, the software system will ask the user whether tangible material is being transferred under the license. If NO is selected, then the next options will be limited to IP licensing aspects (including patents and/or know-how and/or trademarks and/or copyrights). If YES is selected under tangible material, then a specific question arises as to the conditions of the transfer, primarily in terms of possible reach-through clauses. To include reach-through clauses has certain advantages and disadvantages. If the user selects YES, then he or she will be prompted with different language and issues to consider. Also, if the user selected YES, then later down the path, an alternative liability clause will be offered that is somewhat different from the scenario under which no material transfer takes place.

To illustrate, if the user clicks YES under material transfer, he or she will be offered options such as these:

  1. Is the licensor transferring the material with certain claims of ownership on new inventions based on the transferred material?

    image No, the licensor makes no claims on ownership of new inventions.

    • The software system will proceed to the next topic.

    image Yes, the licensor does make some claim of ownership.

    • The software system will offer some of the options illustrated below:

First, the user will be offered some text about reach-through clauses, their utility, and their rationale, and information about how common such clauses are under different conditions. Basically, licensors want to ensure that if the licensee makes an improvement, the licensor is not prevented from using/licensing the improved licensed technology and benefiting from the improvements.

There are several levels of ownership a licensor may wish to exercise. Which one is chosen depends on the commercialization strategies of the licensor, including the symmetry of negotiations. Generally, three levels are typical (whether for commercial or humanitarian use). These will be listed, together with a blank field for the users to specify their own terms. For example:

Licensor gives the material, and if licensee improves the invention or invents something based on the transferred material, licensee will give licensor one of the following:

  1. an exclusive license in all Fields of Use (crops or applications, that is, medical, agricultural, environmental, and so on, as defined above) in all territories (countries, group of countries, as defined above) and grant back a royalty-free nonexclusive license to licensee in Field of Use
  2. a royalty-free nonexclusive license and a right of first refusal to an exclusive license (in some/all Fields of Use and in some/all territories)
  3. a first right of refusal to an exclusive license (in some/all Fields of Use and in some/all Territories).
  4. other (specified by user)

Each such option will be linked to legal language in plain English to be inserted into the license. For example, under 2. above, the following language would be inserted:

In consideration of Licensor’s contribution of Materials (defined above), Licensee grants to Licensor a paid-up, worldwide, nonexclusive license to make, have made, use, have used, import, export, sell and have sold products and processes developed from Materials and an option to obtain a fee-bearing, worldwide, exclusive license to make, have made… (terms to exercise option to be defined; software will prompt user with a new screen on the ways in which such options can be exercised; depending on which is selected, the legal language and clause will be amended accordingly).

For number 3. above, the clause could read:

In consideration of Licensor’s contribution of Materials (defined above), Licensee grants to Licensor an option, exercisable at any time up to two years after expiration or termination to obtain a royalty-bearing, worldwide, exclusive license with a right to grant sublicenses to Company affiliates and subsidiaries in the following Field of Use (defined where field of use refers to crops) in Territory (geographic region, limited or worldwide) or a combination thereof.

Other fields are diverse and include the type of licensee institution, the countries, or the type of license (Table 1).

TABLE 1: OPTIONS UNDER LICENSE TYPE

LICENSE TYPENOTE
ExclusiveExclusive license is a promise by the licensor not to practice under the licensed intellectual property and not to grant any further licenses.
NonexclusiveNonexclusive license ensures that the owner of the licensed intellectual property shall not sue the licensee with respect to acts done within the scope of the license. The licensor can grant several nonexclusive licenses to same intellectual property.
CoexclusiveCoexclusive license is otherwise similar to the exclusive license but the licensor retains rights to itself practice the intellectual property.

As above, depending on which field is chosen, other text in the database template will automatically be inserted into the license agreement.

To generate the complete license in Microsoft® Word®, the user now presses the tab Submit at the bottom right corner. See Box 1 for an example of the output (see also the Appendix to this Handbook for a comprehensive commercial variety license).

4. Conclusions: Implementing COGENCO

CoGenCo has the potential to help public institutions license plant varieties and associated intellectual property more easily than before. It offers a very flexible, pragmatic approach to drafting licensing agreements. A test version of CoGenCo and a preliminary user’s guide, together with the draft license, are available to interested parties. It will require running Microsoft® Access® on a Windows XP or higher system. The authors very much welcome comments and suggestions about the software and look forward to collaborating with interested parties to further develop CoGenCo into a comprehensive and widely available system.

Acknowledgments

We are grateful to the the Rockefeller Foundation for a grant to bioDevelopments-International Institute, Interlaken, New York, that made this project possible. We would also like to thank many people (too numerous to mention) for their valuable suggestions and inputs during this initial consultation/feasibility phase.

 

Box 1: Sample noncommercial variety licensing Agreement

Box 1: Sample noncommercial variety licensing Agreement

Box 1: Sample noncommercial variety licensing Agreement

Box 1: Sample noncommercial variety licensing Agreement

Box 1: Sample noncommercial variety licensing Agreement

Box 1: Sample noncommercial variety licensing Agreement

Box 1: Sample noncommercial variety licensing Agreement

Box 1: Sample noncommercial variety licensing Agreement

Box 1: Sample noncommercial variety licensing Agreement

Endnotes

All referenced Web sites were last accessed between 1 and 10 October 2007.

1 See www.ipHandbook.org.

2 This means that the LICENSOR shall be the first party to which a worldwide exclusive license is offered. Only after the LICENSOR has refused from such a license may the LICENSEE offer the license to others.

Krattiger A, J Dodds and D Bobrowicz. 2007. Potential Use of a Computer-Generated Contract Template System (CoGenCo) to Facilitate Licensing of Traits and Varieties. In Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices (eds. A Krattiger, RT Mahoney, L Nelsen, et al.). MIHR: Oxford, U.K., and PIPRA: Davis, U.S.A. Available online at www.ipHandbook.org.

© 2007. A Krattiger, J Dodds and D Bobrowicz. Sharing the Art of IP Management: Photocopying and distribution through the Internet for noncommercial purposes is permitted and encouraged.