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« Patent Indemnification: Another Really Hard Problem (Part 1)
Licensing: What the In-House Generalist and Business Lawyer Need to Know »

1 comment

Comment from: Hans [Member]  

The transfer "by operation of law" issue is very tricky indeed. State merger statutes come into play, but in general I keep this breakdown in mind:
• Assignments:
Asset purchases;
Direct mergers (target merges into acquirer);
Forward triangular mergers (target merges into NewCo, a subsidiary of acquirer)
• Not assignments:
Stock purchases (but this may trigger a “change of control” prohibition, if there is one);
Reverse triangular mergers (NewCo, subsidiary of acquirer, merges into target and target survives as wholly owned subsidiary of acquirer).

The default rule for assignability of IP also goes against usual contract law principles (so all of us IP folks have to educate the non-IP corporate attorneys sometimes).

A non-exclusive patent license is not assignable “unless the patent owner authorizes the assignment or the license itself permits assignment.” This is contrary to typical contract law, but there is a body of federal common law here specific to patent law.

Non-exclusive patent licenses have been interpreted to be specific to the individual licensees—and therefore not freely assignable to others unless authorized by the agreement.:
"On the related question of the transferability of patent licenses, many courts have concluded that federal law must be applied. In so holding, courts generally have acknowledged the need for a uniform national rule that patent licenses are personal and non-transferable in the absence of an agreement authorizing assignment, contrary to the state common law rule that contractual rights are assignable unless forbidden by an agreement."
Rhone-Poulenc Agro, S.A. v. DeKalb Genetics Corp., 284 F.3d 1323, 1328 (Fed. Cir. 2002) (citations omitted); see also Everex Sys. v. Cadtrak Corp. (In re CFLC, Inc.), 89 F.3d 673, 679-80 (9th Cir. 1996) (“It is well settled that a non-exclusive licensee of a patent has only a personal and not a property interest in the patent and that this personal right cannot be assigned unless the patent owner authorizes the assignment or the license itself permits assignment.”); In re Access Beyond Techs., Inc., 237 B.R. 32, 45 (Bankr. D. Del. 1999) (“The long standing federal rule of law with respect to the assignability of patent license agreements provides that these agreements are personal to the licensee and not assignable unless expressly made so in the agreement.”). This rule is in place partially to prevent “every licensee [from becoming] a potential competitor with the licensor-patent holder in the market for licenses under the patents.” In re CFLC, 89 F.3d at 679. In the absence of the rule, “any license a patent holder granted . . . would be fraught with the danger that the licensee would assign it to the patent holder’s most serious competitor, a party whom the patent holder itself might be absolutely unwilling to license.” Id.

Curiously, the rule for copyright licenses is different!

The two leading cases on copyright licenses are Gardner v. Nike, Inc., 279 F.3d 774 (9th Cir. 2002) and Cincom Sys. v. Novelis Corp., 581 F.3d 431 (6th Cir. 2009).
Both these cases hold that copyright licenses are not assignable in the absence of express authorization (again, federal common law governs questions with respect to the assignability of these licenses):
• The Copyright Act “does not allow a copyright licensee to transfer its rights under an exclusive license, without the consent of the original licensor.” Gardner, 270 F.3d at 780.
• “[I]f the license were silent as to the issue of transfers, federal common law would serve to fill the gap with its default rule that no transfer is allowed without express authorization.” Cincom, 581 F.3d 437, n.4 (citing PPG Indus., Inc. v. Guardian Indus. Corp., 597 F.2d 1090 (6th Cir. 1979)).

05/06/15 @ 13:52