Latest Comments

Dave Kingston

In response to: Most Favored Licensee: The Licensor's Clause from Hell

Dave Kingston [Visitor]

A great point- cases differ dramatically per case, so it is important to take in factors that affect licensing, such as the selling information, the seller, the market and so on. Indeed, leverage is also an important factor. A great resource I came across that may help to give more information regarding licensing law can be found here http://www.garrattssolicitors.co.uk/business-legal-services/licensing.html

 Permalink 09/22/17 @ 08:40
Victoria

In response to: Patent Indemnification: Another Really Hard Problem (Part 1)

Victoria [Visitor]

With respect to the last bullet point, even if the licensor has cleared patent for a product, that does not necessarily mean the product will not be subject to an infringement claim nonetheless, for a number of reasons, e.g. continuations, pending claims, someone disagrees with licensor’s noninfringement assessment. This is really a risk allocation issue more than anything else, because not everything is within licensor’s control.

 Permalink 04/19/17 @ 15:10
Eric

In response to: Optons, Rights of First Negotiation and Refusal: Do you Really Have Anything?

Eric [Member]

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 Permalink 06/13/16 @ 06:59

In response to: Optons, Rights of First Negotiation and Refusal: Do you Really Have Anything?

Larry Schroepfer [Member]

Comment received off-line, that I thought was excellent:

Larry:

Always enjoy your posts. Of course the university can negotiate real terms into the negotiation right, there are plenty of ways around the tax issue, but only a small percentage of universities have the sophisticated legal office that can do it. Here’s the real reason what you suggest is not done in the university space in corporate sponsored research agreements. The sponsoring corporations aren’t interested. Only one in three disclosed inventions gets licensed. Fewer than one in 10 corporate sponsored research agreements result in an invention. Therefore only about 1 in 30 results in a technology that is licensable, and even that one may not be desired by the sponsor. So the sponsors have no desire to spend legal costs doing 30 negotiations (or more) for every one that they actually complete. And the sophisticated ones also know that so long as they have the first right, they can get the license for a cost they desire, as usually they are the only entity interested.

 Permalink 06/08/16 @ 17:05
Intellectulaw

In response to: Wretched Drafting 101: Legalese and Good Old Strunk'n'White

Intellectulaw [Visitor]

I am getting a copy of Strunk’n'White.

 Permalink 04/12/16 @ 16:24
Mark Anderson

In response to: Nondisclosure Agreements: To Mark, or not to Mark?

Mark Anderson [Visitor]

In my experience:
(1) the vast majority of CDAs involve disclosures of routine information, and should have standard terms that are reasonably acceptable to both parties, not very one-sided terms
(2) it helps to make people be reasonable if a 2-way CDA is presented
(3) as you say, people very rarely comply with the marking requirement; they are therefore shooting themselves in the foot by accepting such a requirement
(4) the marking requirement is a bad habit that many large corporations have adopted, along with requiring a time limit on confidentiality. Too many people follow these habits or trends without thinking much about them.

In summary, I agree with the kitchen sink approach in most cases.

 Permalink 03/16/16 @ 09:35
Linda

In response to: Residuals: License to Steal?

Linda [Member]

Similar experience here, where the purpose was "items of mutual interest", and residual memory was anything and everything that the "recipient" came across. And of course, no IP protective clauses ….

 Permalink 02/29/16 @ 09:41
Ross Vincenti

In response to: Licensor Duty to Enforce Licensed Patent Against Other Infringers

Ross Vincenti [Visitor]

Great article Larry. Litigation as you note is fraught with risks not to mention the costs. Very easy for the licensee to say "go get em", but the upside for the licensor is questionable.

 Permalink 01/13/16 @ 11:12
Saul

In response to: Wretched Drafting 101: Please Ignore What I Just Said

Saul [Member]

It is there because of the fear that the caption has been ignored during the negotiation and editing process and no longer reflects the true intent. And it certainly happens. (Though it shouldn’t.)

 Permalink 08/25/15 @ 08:58
Hans

In response to: Assignment and Change of Control Clauses: Gonna be some changes made

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)).

 Permalink 05/06/15 @ 13:52
Ross

In response to: Wretched Drafting 101: Legalese and Good Old Strunk'n'White

Ross [Member]

I’m looking at my copy that has faithfully accompanied me for over a quarter century to every job and every desk I’ve sat behind. While Strunk & White is an invaluable asset for every lawyer and writer, I feel compelled to lament another problem. People in their late 20s and younger have atrocious writing skills. This stems from their use of the same abbreviated words and phrases they use on smartphones, etc., for everyday drafting. I am appalled by how poorly they write. God help them in another 10-15 years as they attempt to climb their career ladders only to find that their writing holds them back.

 Permalink 03/12/15 @ 07:14
Andreas Noack

In response to: Residuals: License to Steal?

Andreas Noack [Member]

My first encounter with such a clause was one that was clearly off-limits. It simply said ‘everything that somone can remember is out’ (well, not that simple, but similar).
There was no limitation to ‘general’ information, and I though ‘well, are they sick?’

 Permalink 01/14/15 @ 14:05
Lawrence Lau

In response to: Rights to Improvements -- Part 2

Lawrence Lau [Member]

How do you triage between fixtures, fittings and furnishings? Obviously I’m generalising here but let’s use the analogy of the original licensed/rented property being a apartment with a shared commons area. You can have a sub-tenant either add
- a new lamp fixed quasi-permanently to the wall
- lightbulb (temporary)
- or lampshade at whim

so you can have intangibles in similar categories. Classic example would be 3D games with engine plugins, user-custom items (which only work within game) and skins.

 Permalink 11/22/14 @ 10:18

In response to: Rights to Improvements -- Part 2

Larry Schroepfer [Member]

I certainly understand the "whomever pays" rule, and I’ve often seen it argued (and employed), but as a licensor, my argument to you would be that I’ve factored rights to your improvements into the license/royalty price that I’ve set. Using your analogy, I’d say that if I’m the one that gave you the platform (Christmas tree) without which the ornaments would have no value in the first place, I ought to be entitled to share in the value (ornaments) that I enabled. At at a very minimum, I shouldn’t be prevented from creating my own ornaments if you patent "ornaments" as a result of working with my tree!

All of which reinforces my belief that rights to improvements really is the hardest non-financial problem of all!

 Permalink 11/19/14 @ 16:46
Ross

In response to: Rights to Improvements -- Part 2

Ross [Member]

As I often represented the licensee my preferred argument was whomever paid for the improvement owns it. If you license to me a Christmas tree, but I pay for the ornaments, I’m taking the ornaments with me when I’m done with the tree. If the licensor is willing to reimburse me for the cost of the ornaments, then he gets to keep them (or at least get a license to use them too). You offer up some good alternatives that work for various situations not amenable to a "whomever pays" rule that I favor.

 Permalink 11/19/14 @ 14:30
drllau

In response to: Licensor Duty to Enforce Licensed Patent Against Other Infringers

drllau [Visitor]

Litigation insurance is an option but they only cover small scale infringers. For larger firms, putting some teeth into the contractual enforcement, even against non-licensees who are not strictly infringing but may need freedom to operate is part of the cost of doing business.

 Permalink 10/30/14 @ 01:47
Barron

In response to: Wretched Drafting 101: Legalese and Good Old Strunk'n'White

Barron [Member]

Pithy prose, aiming for this myself. Obfuscation, we find, is often intentional. Why?
I do not know. Does one party avoid specific performance by
making vague the language within those much mentioned
"four corners" [of the contract].
Thoughts?

 Permalink 10/20/14 @ 19:20
Lawrence Lau

In response to: Rights to Improvements -- Conclusion

Lawrence Lau [Member]

so the pooling of improvements is basically an express assignment back to owner with grantback? how would this work on an international scale (set up an IP holding entity in say Netherland Antilles with innovation box?)

 Permalink 10/03/14 @ 12:26
Brian

In response to: Part 2 -- Patent Indemnification, Another Really Hard Problem

Brian [Visitor]

I (respectfully) disagree. I think it is both fair and reasonable to expect uncapped indemnification liability when buying a license to software. Selling the software and making sure it is free of problems (virus, infringement, defects, lawsuits, etc.) is the responsibility of the seller / licensor, much like when I buy a toaster, I assume the manufacturer has tested it and made sure it works and I have the right and ability to use it. Here’s a more detailed explanation: https://www.linkedin.com/today/post/article/20140602192923-1102979-what-is-a-cap-on-an-indemnity-clause-and-why-should-i-care?trk=prof-post

 Permalink 07/29/14 @ 13:58
Gary

In response to: Patent Indemnification: Another Really Hard Problem (Part 1)

Gary [Visitor]

Here is another way of looking at this question from the licensee’s vantage point. If this example involved for example taking advantage of open source or a free transfer of rights, then I understand. When a licensee pays something of value for the rights and the licensor says you are on your own if the right I licensed to you infringes on a third parties rights, that may not be commercially balanced. There are ways to address a situation where the licensee makes changes in the IP or comingles it with some other IP and that action causes the infringement. However, where the licensee is simply using the licensed technology "as is" without making changes and has paid for that right then it seems commercially balanced and appropriate for the licensor to bear some risk in protecting the licensee. Otherwise what the licensor is saying in the context of purchasing goods example you are self insured if something goes wrong. Part of what the licensee is paying for is the peace that I can use the technology with you protecting me if there is an infringement. If the licensee has no indemnity or one subject to a tiny cap, I would factor that in to what I would pay for the right to use the technology and check what alternatives may be available that are more commercially balanced.

 Permalink 07/28/14 @ 14:16
Joyce

In response to: Patent Indemnification: Another Really Hard Problem (Part 1)

Joyce [Visitor]

Now me, I would have picked the licensor’s implementation of the technology as the trickiest part. It’s difficult to draft an agreement that says, "We indemnify the technology on paper, but not once it’s in a box that you built."

 Permalink 07/24/14 @ 08:23
Ed Simpson

In response to: Patent Indemnification: Another Really Hard Problem (Part 1)

Ed Simpson [Visitor]

Good article Larry. For my part I would never ever EVER advise a licensor to accept this type of indemnification, and it would be a deal breaker if the licensee insisted on it. You’ve identified the pertinent risks and they’re just too big. I major on your 3rd bullet as the best reason why it’s an unreasonable ask, and would expect the licensee to do its own freedom to operate due diligence.

 Permalink 07/23/14 @ 04:04
Joyce

In response to: Wretched Drafting 101: Legalese and Good Old Strunk'n'White

Joyce [Visitor]

Short, clear sentences are best, *especially* in licenses. See this story about the million-dollar comma:

http://www.nytimes.com/2006/10/25/business/worldbusiness/25comma.html?_r=0

 Permalink 07/18/14 @ 11:22
Oliver Schmidt

In response to: Wretched Drafting 101: Legalese and Good Old Strunk'n'White

Oliver Schmidt [Visitor]

Working in licensing audit and contract compliance I see contract interpretation issues due to contract language on a recurrent basis. I’ll have to give Strunk’n'White’s a read, if I can improve my own grammar then maybe it will pave the way for others.

 Permalink 07/18/14 @ 07:08
James J. Aquilina, Esq.

In response to: Wretched Drafting 101: Legalese and Good Old Strunk'n'White

James J. Aquilina, Esq. [Visitor]

Larry,

I agree wholeheartedly that verbose lawyers that intentionally obfuscate are nothing less than poor writers. I own a copy of Strunk & White and try to give it a read through about once a year. I also grew up a devoted Hemingway fan, and remain fond of his stories and terse style. As a patent attorney, I see some of the most tortured use of the English language possible, and I constantly push back on needless wordiness and confusing language (even in claims, where some practitioners see value in ambiguity). Keep up the good fight! I look forward to reading the follow-up articles.

 Permalink 07/17/14 @ 21:29
Bob

In response to: Wretched Drafting 101: Legalese and Good Old Strunk'n'White

Bob [Visitor]

As a non- lawyer who reads contracts, license agreements, and patents, I have only one word to add.
Amen!

 Permalink 07/15/14 @ 09:28

In response to: Licensor Duty to Enforce Licensed Patent Against Other Infringers

admin [Member]

As a non-lawyer, one question I would have is what is a common
amount (percentage of original licensing fees) to be granted in
the case of a royalty reduction to offset infringements made
by competitors ?

 Permalink 07/06/14 @ 16:02
Stephen Juge

In response to: Licensor Duty to Enforce Licensed Patent Against Other Infringers

Stephen Juge [Member]

Thanks for the perceptive insights. My years of consumer products trademark and copyright licensing legal work at Disney prove your points in that context also.

 Permalink 06/19/14 @ 11:09
Stephen Juge

In response to: Licensor Duty to Enforce Licensed Patent Against Other Infringers

Stephen Juge [Visitor]

Many thanks for the helpful insights. Many years of consumer products trademark and copyright licensing legal work at Disney prove your points.

 Permalink 06/19/14 @ 11:07

In response to: Licensor Duty to Enforce Licensed Patent Against Other Infringers

Larry Schroepfer [Member]

Absolutely agree in the case of an exclusive license. This is particularly important in the pharma/biotech space, where the exclusive licensee will spend a significant amount developing the product, and has diligence obligations to the Licensor to do so.

 Permalink 06/17/14 @ 13:15
John W. Caldwell

In response to: Licensor Duty to Enforce Licensed Patent Against Other Infringers

John W. Caldwell [Visitor]

Your comments, Larry, are exactly correct for licensors. The situation is somewhat simpler when a nonprofit is the licensor, however. The right to enforcement is one of a number of terms an academic institution just cannot tolerate. The counterbalance, of course, is the price of the license. In the academic case, policy issues attending these issues at least gives them a "place to stand."

As for licensee, however, I invariably advise that specific, clear and unavoidable enforcement provisions be placed into an exclusive license. This is, in my view, the very essence of exclusivity. If nothing else, a right to sue may be granted the licensee with the licensor agreeing to be an involuntary plaintiff.

If this right is not included, then the license is not really exclusive.

J

 Permalink 06/17/14 @ 10:39