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About

Editor-in-Chief,   Anatole Krattiger

Editorial Board

Concept Foundation

PIPRA

Fiocruz, Brazil

bioDevelopments-   Institute

CHAPTER NO. 11.11

Bobrowicz D. 2007. A Checklist for Negotiating License Agreements. 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. D Bobrowicz. Sharing the Art of IP Management: Photocopying and distribution through the Internet for noncommercial purposes is permitted and encouraged.

A Checklist for Negotiating License Agreements

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

Show SummaryEditor's Summary, Implications and Best Practices

Abstract

This chapter provides a road map for licensing professionals to identify the most common terms, contractual obligations, and other provisions that are likely to be encountered in crafting a license agreement. Emphasis is placed on agricultural technology licenses. Since most people engaged in deal making are involved in multiple deals at the same time, important aspects can be forgotten or overlooked at any time and for any deal. The checklist format allows the licensing practitioner to check off each item once it has been addressed to the parties’ satisfaction. While expansive, it does not necessarily fit all contexts and is therefore intended to serve as a basis from which institutions and individuals can develop their own checklists.

1. Introduction

A checklist to aid in negotiating a licensing agreement, much less to aid in actually preparing and writing the agreement itself, may sound like a simplistic tool to an experienced negotiator or contract attorney. After all, most people in such positions are well educated and used to dealing with multiple projects having many details in the scientific, legal, and business arenas, all at the same time. If they did not have the competence to deal with this type of work situation, they would not last long in the active, high-pressure licensing environment. But it is precisely because of myriad details that a checklist can be life (or deal) saving for the working licensing officer or attorney. Since most people engaged in deal making are involved in multiple deals at the same time, important aspects can be forgotten or overlooked at any time and for any deal. One of the simplest ways to make sure that a crucial or costly mistake does not happen because of an oversight is to use a tool such as the checklist presented here.

2. Specific Checklist Sections

This section introduces and discusses for both licensors and licensees each element of the checklist. If your work requires you to draft license agreements, download the checklist from the online version of this Handbook where it is given without the annotations.

2.1 Section 1 – The parties

Although seemingly self-evident, having all pertinent information about the parties in one place, such as their legal names, the negotiating party’s contact information, and the legal addresses is a time saver when the final agreement is being written. No more last-minute telephone calls or e-mails to get information that should have been exchanged at the first meeting.

PARTIES:

  1. Licensor’s Name:____________________________________

    Address:___________________________________________

    Principal Office:______________________________________

    Incorporated In:___________________ Short Title:_________

    Contact Name:_______________________________________

    Contact Title:________________________________________

    Contact Tel/Fax:_____________________________________

    Contact E-mail:______________________________________

  2. Licensee’s Name:____________________________________

    Address:___________________________________________

    Principal Office:_______________________________

    Incorporated In:___________________ Short Title:_________

    Contact Name:_______________________________________

    Contact Title:________________________________________

    Contact Tel/Fax:______________________________________

    Contact E-mail:_______________________________________

2.2 Whereas clauses

The following set of “whereas clauses” is offered as a guide for detailing the background of the license. Not all parties use whereas clauses; some prefer to make the background information a standard set of clauses that follow language specifying that “the following are terms of the Agreement” or similar language. Some use of background information in a contract is recommended because within a short period of time after the deal is done and the agreement signed, negotiators memories will fade and a short set of statements regarding the background of the deal may become invaluable should the contract need to be interpreted by a court or an arbitrator.

WHEREAS CLAUSES:

  1. Licensor owns/controls certain Intellectual Property/Tangible Property including inventions
    ______, patents ______, applications______, know-how ______, other_______ relating to
    ________________
  2. Licensor represents that it has the right to grant a license to _________
  3. Licensee owns/controls certain Intellectual Property/Tangible Property including inventions
    ______, patents______, applications ______, know-how ______, other _________ relating
    to ________________
  4. Licensee represents ________________________________
  5. Licensee desires license relating to ___________ in order to ________________

2.3 Definitions

A simple contract will not need to have a section devoted to definitions, as the definitions can be presented when special terms are first encountered. A complex document should present all definitions in one section for ease of drafting and later interpreting the contract. General terms used throughout the contract should be placed in this section, as should technical terms that are used frequently. Either an alphabetical or a hierarchical order is recommended, the latter being used when a number of terms are closely related and having them near to each other would allow the reader to more easily navigate the agreement.

Each license will have its own specific set of definitions, so a short list that includes only the most commonly used terms is presented here.

DEFINITIONS:

All other appropriate terms should be listed and defined. Clear definitions will add great clarity to a license. Care should be taken to write definitions that, in general, stand alone and are not circular in construction.

A good place to begin thinking about what to define is with a definition of the parties. If dealing with a company, is it the company and all its affiliates? All of its subsidiaries? Or only the parent company? Products/Processes licensed should be specifically defined as Licensed Products or Licensed Processes. If only certain types of inventions are covered, define the inventions here and refer to them as Inventions; include the patent number and/ or patent application number that is being licensed, and specify if Know-how is included.

Licensee, sales, net sales, profit, territory, field, patents, patent rights, intellectual property, and nonprofit are examples of other relatively common terms, and there are many more. Once defined, these terms will usually appear, throughout the rest of the contract, with the first letter capitalized or in all capitals.

2.4 The grant sections

The following sections may seem to be overkill to the licensing professional. However, each and every section, if not handled with care and forethought, can result in a deal that is more than unsatisfactory to one or both parties.

2.4.1 Rights granted

The exact grant language should be specified. This includes which intellectual property rights the license is given under: patent right only or know-how right or both and exclusive right, coexclusive with the licensor, or nonexclusive. The section should also specify the term of the exclusivity and/or nonexclusivity, and whether such right is irrevocable; and if there is a right to grant sublicenses. Each organization will find that it tends to make deals in a certain way and may find that certain combinations of grant language will be used repeatedly. In that case, this section may be easily amended to the specific organization’s needs.

  1. RIGHTS GRANTED:

    a) All substantial (statutory) rights to practice under the rights in specified Intellectual Property/Tangible Property (detail here)________________;

    b) and to make ____, have made_____, use_____, import_____, offer for sale____, and sell
    _____ products and processes;

    c) Exclusive for______ years and nonexclusive thereafter, or

    d) Non-exclusive______, to make (manufacture)______, or

    e) Exclusive_____ to have made for own use______; or

    f) Exclusive except as to Licensor______, to use______, to export________, to make and sell
    in limited markets_______;

    g) Irrevocable______, to sell______, have sold________;

    h) With right to grant sublicenses______, to lease______, rent______.

2.4.2 License restrictions

This section deals with the field, territory, prior licensee’s rights, and the commercial rights retained by the licensor. Some of what is contained in this section appears under Section 1 (the parties), and may not be needed in all situations.

  1. LICENSE RESTRICTIONS:

    Limited to the Field_________________________________________________________
    Limited to Territory_________________________________________________________
    Subject to prior Licensee (identify, if any) rights_________________________________
    Subject to Licensor’s right to make______, have made______, use______, have used
    _____, export_____, import_____, sell______, have sold______ (as many as applicable).

2.4.3 Reservation of rights

This section is particularly important when the licensor is a nonprofit and must ensure that certain rights to use the intellectual property are reserved for academic, nonprofit research, or humanitarian uses in developing countries, or according to the terms of the Bayh-Dole Act (in the United States). Forgetting to include the needed reservation of rights in a license could make the license invalid and/or could lead to an expensive court fight to determine what rights are in fact owned by the licensor.

  1. RESERVATION OF RIGHTS:

    a) Licensor hereby reserves an irrevocable, nonexclusive right in the Technology (on behalf of itself and all other nonprofit/academic research institutions)

    b) For Educational and Research uses_____, including uses in Sponsored Research ____ and
    nonprofit collaborations_____.

    c) For Humanitarian Purposes_____, or

    d) For uses in Developing or Economically Disadvantaged countries_____ (specify countries)_
    ________,

    e) For the U.S. government under the Bayh-Dole Act______.

2.4.4 Right to grant sublicenses

The grant of a right to grant sublicenses to third parties also has a number of important choices that must be considered by parties when awarding this portion of the license. Sublicensees may be anyone or may be limited to, for example, only parties in privity with the licensee; only affiliates of the licensee; only a specified number of third parties; or only parties preapproved by the licensor.

  1. LICENSEE MAY GRANT SUBLICENSES:

    a) To any other party ____;

    b) To limited number of parties_____;

    c) To Affiliates of Licensee ____ only_____;

    d) To third parties preapproved by Licensor ____;

    e) To nominees of Licensor ____;

    f) At specified consideration (indicate)____________________;

    g) Consideration to be shared with Licensor________________;

    h) Copies of sublicense to be furnished to Licensor________;

    i) Under other conditions_______________________________________

2.4.5 Territory

The territory that is granted to the licensee under the license must be specifically identified.

  1. TERRITORY:

    a) All countries______

    b) All countries except_______________________

    c) Following country/countries_____________________________________

    d) That portion of a specific country comprising___________________

2.4.6 Term of the agreement

The date the agreement begins, the effective date, should be noted, as well as the ending date of the agreement, by whatever method that is calculated. Some of the most common ways are listed below.

  1. TERM OF AGREEMENT:

    Effective Date is_______.

    For______ years/months/day (as agreed), until (specify date)_____; or
    For the life of a specific patent or other intellectual property________; or
    Until some future event (specify)______________________________

2.5 Improvements

This section deals with any improvements made and/or patented (by whom and paid for by whom) during the term of the license by either the licensor or licensee and what obligations are present in the deal as to whether or not to include future technology under the present license or to have future technology fall under the reservation of rights to the licensor.

7. IMPROVEMENTS BY:
LICENSOR:LICENSEE
Included______Included_______
Not included______Not included_________
Who will file_____________________________Who will file_________________________
Who will pay costs_______Who will pay costs_________
Assigned/licensed to Licensee______.Assigned/licensed to Licensor_________

2.6 Consideration

The consideration sections of the checklist is relatively involved, and can be cut back if equity is not part of the payment for the license. Royalty, milestone payments, type of currency, determining rate of exchange, and equity-ownership issues are listed here, as is the issue of minimum annual payments, particularly important in the case of an exclusive license.

8. CONSIDERATION FOR LICENSE:

Royalty free ___; or
Royalty, ____ per cent; of profits______; of gross sales______; of net sales______; specific
amount (specify)______ per unit (specify)______; other (specify)_________;

Single sum (license fee) of_________;

Milestones (what they are and amount owed)________________________;

Payment is to be made in currency of which country___________;

At the then current rate of exchange___________________;

At the rate of_______(currency) for________ (currency)

If exchange rate decreases or increases by ____(specify a percentage) % the payments shall decrease or increase by like amount; or exchange rate shall be that published in__________________.

Equity: Stock of Licensee (specify)_____________________________
stock of existing company______; new company______
value of the shares of stock shall be market value ____ at date of agreement_______
book value______ according to Schedule ____; stock shall have full voting rights
______; nonvoting______;

 

  1. MINIMUM ANNUAL PAYMENT FOR LICENSE:

    Amount______ per calendar year; per 12-month period______
    Payable in advance______

    Payable at end of calendar year______; of 12-month period______
    Credited against earned royalties, yes______; no______

2.7 Reports and auditing of accounts

Royalties based on any measure tied to a product’s sales should be paid to the licensor accompanied by a report stating how the royalty was calculated. It should be decided how often and when these reports (and royalties) are due. Additionally, the right of the licensor to audit the books that generate these reports should be a part of the license.

  1. STATEMENTS OF EARNED ROYALTY:

    Quarterly, within______ days of end of quarter
    Annually, within______ days of end of year
    Other periods, (specify)____________________

    In writing, and certified by __(official or auditing firm) ____
    With names and addresses of sublicenses______

    With copies of sublicenses______

    Together with payment of royalty accrued______

  2. INSPECTION OF LICENSEE’S ACCOUNTS:

    Not permitted______

    Permitted______
    at any time during business hours______
    at specified times______
    by Licensor’s authorized representatives______
    by Certified Public Accountants______

    Audit to be paid by Licensor unless underpayment is greater than ___%

2.8 Representations/warranties

Certain basic representations and warranties should be given by each party to the other, such as the ability to enter into this agreement, the validity of the intellectual property, and a standard warranty disclaimer. These and others are listed below.

  1. REPRESENTATIONS/WARRANTIES:
    1. Validity of Licensed IP
      Not admitted______
      Admitted to Licensee______

      If patents held invalid, then:
      Licensee may terminate:

      as to invalid claims______
      entire agreement______

    2. Good title to Intellectual Property in_______ (specify countries)
    3. Authority of Licensor to enter into the License_____
      Authority of Licensee to enter into the License_____
    4. D. Standard warranty disclaimer, of fitness for particular purpose Merchantability______; Express or Implied______.

2.9 Infringement

These sections deal with how past infringement by the licensee is handled; if the IP is infringed by third parties, how such infringement will be handled, and if there is a recovery for the infringement, how that will be divided between the licensor and licensee. Indemnification by the licensor of the licensee to practice under the IP rights is also covered.

  1. INFRINGEMENT:
    1. INFRINGEMENT OF LICENSED INTELLECTUAL PROPERTY/TANGIBLE PROPERTY Past infringement by Licensee

      forgiven______; not forgiven______

      forgiven for payment of______

      If infringed by others:

      Who will notify_______________
      Who will file suit______________
      Who is in charge of suit________
      Costs: borne by______________

      divided______________

    2. INFRINGEMENT OF OTHER’S INTELLECTUAL PROPERTY/TANGIBLE PROPERTY
      No indemnity by Licensor______

      Licensor indemnifies Licensee______

      Licensee indemnifies Licensor______

      Who will notify_____________

      Who will defend_____________

      Who will pay costs__________

      Costs: borne by____________
      divided_______________

    3. RECOVERY AFTER DECREE

      Retained by______; Divided______

      Right to settle suit:

      by Licensor______; by Licensee______
      by Licensor only with consent of Licensee______
      by Licensee only with consent of Licensor______

2.10 Diligence

Diligence covers the concept that the exclusive licensee will do all it can to operate under the license so that the licensor reaps a monetary benefit under the license. If this issue is not covered, then the exclusive licensee can sit on the technology and keep others from exploiting it and bringing money to the licensor.

  1. DILIGENCE BY LICENSEE (Usually in absence of minimum royalty):

    No obligation______

    Licensee will use its best efforts to______

    Licensee will use its reasonable best efforts______

    Licensee agrees to: produce______ or sell______ specified units_____
    produce______ or sell______ specified products ____
    invest specified amount____________________
    satisfy demands of trade______
    not to refuse reasonable request for sublicense______

    Penalty for lack of diligence: license converted to nonexclusive______
    Licensor may nominate Licensees______

Licensor may terminate __ upon __ days’ notice in writing

2.11 IP defined

Intellectual property (IP), and how it is paid for, must be defined in the agreement, whether it is only one patent or if it includes various reports and tangible materials. This part of the checklist may be more relevant to for-profit licensors, but nonprofit licensors may also have more than just a patent (and its family) to include in the definition of IP.

  1. INTELLECTUAL AND TANGIBLE PROPERTY OF LICENSOR:

    Not included, except as described in patents or applications______
    Included for products (specify)_______________________

    For term of agreement______; for specified term______

    For territory of license______; for other territory_______

    1. NATURE OF INTELLECTUAL AND TANGIBLE PROPERTY
      1. Invention records __Know-how, not confidential ___
      2. Laboratory records ___Know-how, confidential ____
      3. Research reports ___Employee to be bound______
      4. Development reports______
      5. Laboratory notebooks______
      6. Construct components and design______
      7. Test field lay-out and design______
      8. Production specifications______
      9. Raw material specifications______
      10. Quality controls______; ISO 9000 procedures_______
      11. Economic surveys______
      12. Market surveys ___; Producer lists __; Brokers ___
      13. Promotion methods______
      14. Trade secrets______
      15. List of customers______
      16. Drawings and photographs______
      17. Models, tools and parts______
      18. Germplasm____________________
      19. Other (specify)____________________________
    2. PAYMENT FOR INTELLECTUAL AND TANGIBLE PROPERTY

      Included in royalty______

      Not included in royalty______

      Single payment of________________________________
      Stock in amount of_______________________________
      Annual service fee of______________________________
      for term of agreement_______________________
      for specified term__________________________
      If Intellectual Property surrounding it is held invalid:

      Know-how payment stops______
      Know-how payment continues______

 

  1. INTELLECTUAL AND TANGIBLE PROPERTY OF LICENSEE:

    Not included, except as described______

    Included for products (specify)______________________
    For term of agreement______; for specified term ___
    For Territory______________________

    Nature of Property included:_________________

2.12 Right of inspection; technical personnel

If the licensee has licensed seed that is being produced by the licensor and that will include the transfer of tangible material (the seed) to the licensee, the licensee may want to have the right to inspect the licensors research data and fields during the term of the license. Whether or not licensors personnel shall be used to transfer know-how or tangible materials to the licensee, and at what cost, is also an important item to note in the contract.

  1. RIGHT OF INSPECTION:

    Licensee shall have the right to inspect Licensor’s:

    Research laboratory______

    Development laboratory______

    Laboratory notebooks______

    Test fields______

    Production fields______; Nurseries______; Greenhouses_____

Number of visits permitted per year______; Number of persons______

Special conditions of visits_______________________________________

Licensor shall have reciprocal rights of inspection___________________

  1. TECHNICAL PERSONNEL:

    Licensor shall provide technical personnel to deliver Intellectual Property/Tangible Property (specify)_________:

    At Licensor’s expense______; At Licensee’s expense______
    Not more than______ persons for not more than______ days
    At a fee which shall be the salary, plus______ per cent

    Travel expenses______; living expenses______
    borne by Licensor______; borne by Licensee______

    Number and duration of stay of technical personnel determined by: Licensor______; Licensee______; mutually______

    Ownership of reports made by technical personnel________

2.13 Remaining sections

The remaining sections of the checklist are what may be identified as the “boilerplate sections” of the license, even though all of these terms are subject to negotiation. In any case, confidentiality terms, provisions for export control, the non-use of each party’s name by the other party, arbitration (or not), terms of breach that will cause termination of the contract and the ramifications thereof, force majeure, assignment, favored-nation clause, notices, integration, language, modifications, applicable law, and schedules should be standard items considered by every licensing professional.

2.14 Confidentiality

If a confidentiality, or nondisclosure, agreement has been entered into by the parties and will remain effective during the term of the license agreement, nothing else is needed. If this hasn’t been done, a section dealing with terms of confidentiality may be put into the license agreement. If the previously agreed-to confidentiality agreement is weak, now is the time to bolster it and to make sure that these terms in the license agreement take precedence over earlier agreements.

19. CONFIDENCE OF CONFIDENTIAL INFORMATION:

No obligation______; Licensee obligated______

Both parties obligated______

Confidence maintained for specified time ____; Without limitation as to time______; life of
agreement______

Until published by owner______

Existence of this agreement confidential ___; Terms and conditions of this License to be kept confidential ___

Other_____________________________

2.15 Export regulations; use of party’s name

Export regulations are important in deals where technology is exported from the United States. All exports must comply with U.S. export control laws and regulations, and in particular, those goods and IP that may have a military use. It is a topic outside of the scope of this chapter, but as an item on the checklist, it alerts the negotiator that this is a topic to be considered. Other countries may have laws dealing with the same topic or with issues or registering the final agreement with the government. Again, this is a memory jog for the negotiator.

In some cases, either one or all of the parties will not want its/their name used in connection with any licensed products advertised or sold, as it may suggest that the licensing institution is recommending these goods. If this is the case, this should be stated in the agreement.

  1. A. EXPORT CONTROL_______

    B. Government registration regulations_____

  2. NON-USE OF NAMES

    Licensor’s______, with permission______
    Licensee’s______, with permission______

2.16 Arbitration

In the case of a major disagreement about the terms of an agreement, parties may wish to take the issue to arbitration. Arbitration can be carried out in many different ways and it is easier to specify in the agreement the rules to be used for arbitration, before there is an issue to arbitrate.

  1. ARBITRATION:

    No right of arbitration______

    Parties will use their best efforts______
    Parties agree to arbitration by:

    American Arbitration Association______

    By other body______

    By three persons, one selected by each party and a third by the selected persons______

    Appeal from arbitration decision:

    Not permitted, decision final and binding______
    Permitted_____________ to____________

2.17 Termination

The termination section of an agreement can be quite complicated, or it can be very simple. I have seen agreements that have been hung up on determining what to do with the rights of the parties if a material breach were to occur. Thought should be given to this area, but beware of having it take over the negotiation. Areas to consider include the right of either party to end the agreement for no reason at all; the rights of the party that has performed when confronted with a party that refuses to perform; material breach issues; and length of notification of breaching activity and time given to the breaching party to cure the breach before losing rights and/or being charged penalties. Issues dealing with the natural expiration of the license should be considered, as well. What happens to the know-how (if any) upon the expiration of all patents? And what are the confidentiality provisions?

  1. TERMINATION:
    1. By Licensor:

      If certain person incapacitated ___ (name) ___

      If certain person terminated __ (name) __

      At specified time______

      Upon breach after __ days written notice if not remedied within ____ days
      Other___________________________________

    2. By Licensee:

      At any time upon______ days written notice
      On any anniversary date______

      At a specified time______

      Only upon payment of penalty of__________ dollars
      Upon breach after ___ days written notice if not remedied within __ days Other___________________________________

    3. Upon expiration, Licensee assigns to Licensor:

      Trademarks______

      Patents______

      Copyrights__________

      Sub-licenses__________

      As to any specified patents or applications______

      Germplasm_________________

      As to any specified country______

      Of exclusive license with right to continue as nonexclusive______
      Whenever any essential claim held invalid______

      Upon bankruptcy of either party______

    4. Upon Termination, without breach, Licensor assigns to Licensee:

      Trademarks______

      Patents______

      Copyrights___________

      Sublicenses______

      As to any specified patents or applications______

      Germplasm_________________

      As to any specified country______

      Of exclusive license with right to continue as nonexclusive______
      Whenever any essential claim held invalid______

      Upon bankruptcy of either party______

    5. Upon Termination with breach, Licensee assigns to Licensor:

      Trademarks______

      Patents______

      Copyrights_________

      Sublicenses______

      As to any specified patents or applications______

      Germplasm_________________

      As to any specified country______

      Of exclusive license with right to continue as nonexclusive______
      Whenever any essential claim held invalid______

      Upon bankruptcy of either party______

    6. Upon termination, with breach, Licensor assigns to Licensee:

      Trademarks______

      Patents______

      Copyrights_________

      Sublicenses______

      As to any specified patents or applications______

      Germplasm_________________

      As to any specified country______

      Of exclusive license with right to continue as nonexclusive______
      Whenever any essential claim held invalid______

      Upon bankruptcy of either party______

2.18 Force majeure

This is the “it is out of my control” reason for not performing under the license. A hurricane has just wiped out your seed crops for the year, and you have no seeds to provide or to sell; your chemical plant just went up in flames. Things happen, and this fact of life should be considered in the contract. The key is to determine what is required after the force majeure occurs to get the licensed product out the door, or the goods to the licensee as quickly as possible. Technically a French term, it literally means “greater force.”

  1. 24. FORCE MAJEURE:

    Licensor has right______

    Licensee has right______

    Both parties have right______

    Nature of Force Majeure: Natural events: fire, floods, lightning, windstorm, earthquake, subsidence of soil, etc.

    (specify)______________

    Accidents: fire, explosion, equipment failure, other___________

    Civil events: commotion, riot, war, strike, labor disturbances, labor shortages, raw material and equipment shortages______

    Governmental: government controls, rationing, court order______

    Any cause beyond control of party______

    Time after occurrence that the exclusive license becomes nonexclusive_____months
    If there are fixed payments, are they excused during FM period ___?

2.19 Assignment provision

A license is considered to be personal to the licensor, especially in the case of an exclusive license. The licensor hand picks the licensee, for many reasons, and rejects others for many reasons. Additionally, an exclusive licensee may be interested in taking a license from a particular licensor, and not from another. In these cases, the right to assign a license may be forbidden, or at least greatly limited to “only with the permission of the nonassigning party.” Nonexclusive licenses tend to be more open to assignment, especially if there are many licensees. There may or may not be fees attached to the transfer, or assignment, of a license.

  1. ASSIGNMENT OF AGREEMENT AND LICENSE:

    a) Not assignable by either party______

    b) Assignable by Licensor, without consent of Licensee __; only with consent __

    c) Assignable by Licensee, without consent of Licensor; only with consent ___

    d) By either party upon:

    Merger______

    To successor of portion of business involving: license___; or only entire business ___ To any company of which a majority of stock is owned______

    To any company of which a controlling interest is owned______

Binding upon heirs, successors and assigns______
Fee for assigning_______ How much?________

2.20 Favored nation

A licensee may demand that they pay the same royalty and/or fee as another licensee that pays the least for the same license. This can be limited, for example, to the same royalty rate, but not to up-front fees, or not take in consideration the worth that cross-licenses to IP bring to a deal. Generally, it is very tough to determine if one party has a better deal than another unless it is a straight money deal.

  1. FAVORED NATION CLAUSE:

    Licensee guarantees performance (and amount of return)______
    Licensor required to notify Licensee of similar license______
    Licensee has option to take term of similar license______
    License changed to terms of more-favorable license______
    Licensee may terminate if not given cheaper license______

2.21 Notices; integration; language; modifications; law; signatures

You will find that clauses that involve the following issues tend to be boilerplate clauses:

  • Notices. the handling of any notices, payments, and so forth, that you must make or should receive
  • Integration. a statement that this is the controlling document, no matter what else was said or signed previously, unless specifically stated in the license.
  • Language: deals with languages used in writing the license (Will each translation of the license be acceptable? Or only the license written in one of the languages?)
  • Modifications: specifies whether amendments to the license are to be in writing (If oral changes are OK for your deal, or for portions of it, specify it here.)
  • Law: specifies which country’s laws will be applied to interpreting the license; what courts will hear a lawsuit; and in what country, specifically, lawsuit would be filed.
  • Signature: recommended to type in the name and title of the signatory (Two years after signing, all parties to the deal may have changed, and many signatures may be illegible by then.)

  1. NOTICES AND ADDRESSES:

    By registered mail______

    By registered air mail (for foreign licenses)______

    By overnight mail______

    After ___ days if by FAX with confirming telephone call ___
    After ____ hours if by e-mail to ____specify_____
    Licensor’s legal address for notice:___________________
    Licensee’s legal address for notice:___________________

  2. INTEGRATION:

    This instrument is the entire agreement between parties______

    This agreement supersedes all______ prior agreements between the parties or the
    agreement dated_____________________

  3. LANGUAGE (for agreement with foreign language licenses):

    The official language(s) shall be __specify language(s)____
    Copy in_____ language shall be official______; unofficial __

  4. MODIFICATIONS AND AMENDMENTS:

    This License can not be modified or amended___________

    No modification effective unless written and signed by both parties __

  5. APPLICABLE LAW:

    To be read, construed, understood and adjudicated according to the laws of_______ in the courts located in__________.

  6. 32. SIGNATURES:

    For Individual: Witnessed by______ witness(es)
    For Corporations:

    By officer______
    Title shown______

2.22 Schedules

This is the place to give very specific listings of items covered in the license, background documents, and research project outlines and specific procedures. It can be easier to modify a schedule than the whole contract, should the need for changes arise. A few types of schedules are listed.

  1. SCHEDULES:
    1. PATENT LIST (Give inventor, number, issue date, official title)
    2. PATENT APPLICATIONS (Give inventor, number, filing date, official title)
    3. DESCRIPTION OR COPIES of official documents, such as sublicenses, assignment, prior license, etc.
    4. ACCOUNTING PROCEDURES for determining sales, net sales, sale value of stock, or other property
    5. EXISTING LICENSES AND/OR SUBLICENSES
    6. SPECIFICS OF EQUITY ARRANGEMENTS
    7. RESEARCH PROGRAM DETAILS

3. Conclusion

This license checklist is a comprehensive tool useful for capturing very important concepts and terms in a complex license. Nonetheless, the checklist can and should be modified by each institution to reflect the way it does business. Having key concepts available to the negotiator and license draftsperson with a quick reading of a checklist can save much aggravation and potential misery should a deal go bad during its lifetime. It is much more cost effective to craft a sound license up front, having key terms as well-defined as possible, than it is to fix the problem through arbitration or litigation later on.

Endnotes

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

Bobrowicz D. 2007. A Checklist for Negotiating License Agreements. 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. D Bobrowicz. Sharing the Art of IP Management: Photocopying and distribution through the Internet for noncommercial purposes is permitted and encouraged.

User Comments and Uploads RSS

7 comments including 6 uploads.

 

Admin (30/04/2010 05:51:55)

 

Handbook Editors (30/04/2010 05:52:32)

As we all know most publishers - joining in with new IT-developments - are
nowadays actively working on digitizing their publications and storing these
documents on their own computers or those of others, in order to distribute
them electronically or have them distributed. They are making them available for
use, until now in most cases only as a supplement to the printed versions.
Publishers are working on or are considering - with or without the intervention
of libraries - activities such as storage, disclosure and provision of access that
traditionally belong to the field of work of libraries. By using the new scope that
information technology offers, they try to defend their position in the field of
information and, if possible, to strengthen it.
Unfortunately the cost of digital information is not any lower than than printed
information. On the contrary, the cost is generally even markedly higher. Many
commercial publishers offer electronic versions of their journals for sale only in
combination with the printed ones, and request for these electronic versions a
rise in subscription price that varies with each publisher, but usually exceeds
10%. It should be noted that a small number, together with some learned
societies, have decided (temporarily?) to avoid a rise. Some publishers - and not
the smallest ones - when negotiating licences demand a number of supplementary conditions that do not facilitate the decision about closing such
licences.

Related upload: 1999-4-klugkist_1.pdf (59K) -- .

 

Handbook Editors (30/04/2010 06:35:19)

Aboriginal communities must nurture their Indigenous Knowledge in order to
preserve it, pass it on to the next generation as they have done down through the
centuries, and protect it from misuse by others. A community’s Indigenous
Knowledge (IK) can define a community’s uniqueness, can underlie its relation to
the world, and can tie the past to the future.
However, there are no easy, instant ways of preserving and protecting IK. On the
one hand, it is disappearing from many communities, often due to changes in
Aboriginal lifestyles that are hindering the process of transferring knowledge from
the elders to younger members of the community. On the other hand, it is being
misused and often abused by those outside the community.

Related upload: A Community Guide to Protecting Indigenous Knowledge.pdf (356K) -- .

 

Handbook Editors (30/04/2010 06:36:24)

A discussion of the merits of licensing, structure and elements of a licence, how
royalties are calculated and the issues to be considered in drafting and negotiation
a licence agreement. This article based upon an essay which won the LES ANZ Prize.

Related upload: GuidetoLicensing_Bills.pdf (374K) -- .

 

Handbook Editors (30/04/2010 06:37:38)

This project entailed exploratory research on the subjects of implementation of native title and related agreements, and their sustainability. It is intended to provide pointers for further development of information on implementation and sustainability for the information and use of NNTT Members and staff. To date, a lack of attention to implementation and sustainability issues in agreement making literature is apparent. This may indicate a general failure to effectively monitor and implement agreements. The apparent absence of interest in agreement
implementation appears illogical given the level of resources, both financial and human, that go into establishing agreements.
Examination of a range of extant agreements found that, while most include provisions relating to implementation, there is little evidence of consistency or a framework to assist analysis. No established models or frameworks exist in relation to implementation issues involved in agreements between indigenous peoples, developers and governments, with little writing or research in the implementation area to draw on.

Related upload: Implementation and resourcing of native title and related agreements.pdf (512K) -- .

 

Handbook Editors (30/04/2010 06:38:46)

At the Fourth WTO Ministerial Conference in Doha in November 2001, WTO Members agreed to negotiations on “the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services”.1 The Doha Ministerial Declaration (DMD) states that negotiations on trade liberalization in environmental goods and services (EGS) should enhance the mutual supportiveness of trade and the environment, suggesting a potential for “win-win” outcomes.2 The uncertainty about definitions and classification of the environmental industry enhances the impression that there is everything
to play for in the negotiations and that there are potential gains for developed and developing countries.
Even a cursory look at the environmental industry suggests that the developed countries will be looking for winning propositions in terms of market access. For developing countries, it is access to EGS that is going to be more important. Their potential gains are in improved environmental conditions and resource management at home, and in strengthened capacity to comply with environmental requirements abroad.

Related upload: LeadArticle2.pdf (108K) -- .

 

Handbook Editors (30/04/2010 06:39:55)

In contrast to prior studies examining strategic alliances as discrete governance structures (e.g., alliances vs. M&A, equity vs. non-equity agreements), we investigate their particular contractual features. The analysis examines the dimensionality of the contractual complexity construct and investigates the determinants of firms’ adoption of various contractual provisions. We find two
underlying dimensions of contractual complexity, based upon the enforcement and coordination functions of different contractual provisions. The evidence reveals that firms’ usage of particular contractual provisions is a function of asset specificity as well as whether the alliance’s duration is pre-specified or open-ended. The findings also speak to the debate surrounding the roles of
prior ties and trust for alliance governance. Firms that have collaborated with each other in the past are not less likely to negotiate enforcement provisions; rather, repeat collaborators are less likely to adopt contractual provisions that are informational in nature and are geared to the coordination of the alliance.

Related upload: reuer-2007-strategic_alliance_contracts_dimensions_and_determinants_of_contractual_complexity.pdf (174K) -- .