Ip For Non Lawyers March 4, 2009

VLP Virtual Law SchoolIP for Non-Lawyers

March 4, 2009

Ellen Leznik, Founding Partner, Virtual Law Partners [email protected]

(650) 321-1393Dianna DeVore, Partner, Virtual Law Partners LLP

[email protected](415) 963-4362

mailto:[email protected]

mailto:[email protected]

Select IP Issues in Licensing

Ellen Leznik, [email protected]

March 4, 2009

VIRTUAL LAW PARTNERS LLP

March 4, 2009 Virtual Law Partners LLP 3

What is Intellectual Property?

PatentsExclusive rights granted by Federal Government for a specific period of time.

CopyrightsProtection provided to a wide range of “original works of authorship” that are fixed in a tangible form of expression, such as software, literary works, photographs, audio and video recordings and other forms of intellectual works.Example of notice: © 2009 Virtual Law Partners LLP

TrademarksWords, names, symbols or other devices used to identify and distinguish business, goods or services.State and Federal registration.™ - not yet registered® - registered

Trade SecretsConfidential business information which provides an enterprise a competitive edge.


Importance of Definitions

Ability to define terms

Often a sign of whether the deal has been sufficiently well understood and defined.

“Nesting” definitions vs. circular definitions

Example of a “nesting” or “hierarchical” definition:

“Collaboration Patents” shall mean all foreign and domestic patents (including extensions, reissues, re-examinations and inventors certificates relating thereto) that issue from patent applications (including substitutions, provisionals, divisionals, continuations and continuations-in-part of such applications) that claim inventions in the Collaboration Know-How and that are filed by or on behalf of one or both of the parties hereto.

“Collaboration Technology” means the Collaboration Patents and the Collaboration Know-How.


Importance of Definitions (cont’d)

“Nesting” definitions vs. circular definitions (cont’d)

Example of a circular definition:

“Licensed Products” means all products the manufacture, use or sale of which involves the use of Licensed Technology.

“Licensed Technology” means all patents and know-how owned and controlled by Company which are necessary or useful in the manufacture, use or sale of Licensed Products.


IP Rights: Inventorship vs. Ownership

Inventors/CreatorsEmployeesConsultantsContractorsResearchers (academic, non-profit, government)Collaborators

Transfer of ownershipAssignmentLicenseReserved rights


IP Rights: What is Included?

A bundle of rights

Use

Territory

Time

Exclusion of others


IP Rights: License Grant

Recipient

Single entity

AffiliatesCan also be done through a sublicenseConsider what effect it may have on other terms, such as minimum royalties

Joint VenturesConsider issues relating to license termination issues, such

as when your JV was not properly established, JV is dissolved, or one party purchases all JV interests


IP Rights: License Grant (cont’d)

Purpose

Patent license: use, make, have made, offer for sale and sell.

Copyright license: copy, make derivative works and reproduce.



Scope

TerritoryBe precise when defining TerritoryExample: China“Territory” shall mean the People’s Republic of China,

including all provinces and regions thereof, but excluding Hong Kong.

Field of useNeed to specify if licensed technology has applications in more than one fieldPotential pitfall – indication splitting (“Amgen/Ortho” problem)



Exclusivity

Exclusive vs. non-exclusive

Exclusive option vs. exclusive license

Exclusive option vs. right of first refusal



Sublicense Rights

“Have made” implies sublicense rightsRestrictions on sublicensingImpact on other provisions: royalties, termination, confidentiality, inventions

Transferability

Potential pitfall: conflict with the Assignment provision



Royalty/Fee

Royalty-bearingFee-bearingRoyalty-freeFully-paid

Term

Patent license vs. blended license (patent plus know-how)Term of license grant vs. term of royalty



Sample license grant clauses

Biotech:

“BiotechCo grants to PharmaCo and its Affiliates an exclusive, royalty-bearing license under Licensed Technology to research, develop, make, have made, import, export, market, sell and distribute Licensed Products in the Territory in the Field.”



Sample license grant clauses (cont’d)

Software:“Subject to the terms and conditions of this Agreement, SoftwareCo hereby grants to Customer a fee-bearing, royalty-free, nonexclusive, nontransferable license to use the Software through the SoftwareCo Servers. Except as specifically authorized by this Agreement, no license is granted under this Agreement to Customer to distribute the Software for use, whether or not as part of the SoftwareCo Services. SoftwareCo shall be responsible for obtaining all third party software licenses required to provide the SoftwareCo Services.”


Collaborations with Government

Company’s existing inventions

Template:

“Background Invention” means an Invention conceived and first actually reduced to practice before the effective date of this Agreement. Background Inventions shall be included in Appendix B.

Negotiated:

“Background Invention” means an Invention conceived or reduced to practice before the effective date of this Agreement.


Collaborations with Government (cont’d)

New inventions resulting from collaboration

Template:

“CRADA Subject Invention” means any Invention of a VA Employee, of Collaborator, or of both a VA Employee and Collaborator, conceived or first actually reduced to practice in the performance of the Statement of Work [15 U.S.C. 3703(9), (10)].

Negotiated:

“CRADA Subject Invention” means any Invention of a VA Employee, of Collaborator, or of both a VA Employee and Collaborator, conceived and reduced to practice in the performance of the Statement of Work [15 U.S.C. 3703(9), (10)].



Government reserved rights - third party licensePursuant to 15 U.S.C. § 3710a(b)(1)(B), if VA grants an exclusive license to a CRADA Subject Invention made solely by a VA Employee or jointly with a Collaborator employee, the Government retains the right to require Collaborator to grant to a responsible applicant a nonexclusive, partially exclusive, or exclusive sublicense to use the CRADA Subject Invention in Collaborator’s licensed field of use on terms that are reasonable under the circumstances, or, if Collaborator fails to grant a license, to grant a license itself. The exercise of these rights by the Government will only be in exceptional circumstances and only if the Government determines (i) the action is necessary to meet health or safety needs that are not reasonably satisfied by Collaborator, (ii) the action is necessary to meet requirements for public use specified by Federal regulations, and such requirements are not reasonably satisfied by Collaborator, or (iii) Collaborator has failed to comply with an agreement containing provisions described in 15 U.S.C. § 3710a(c)(4)(B). The determination made by the Government under this paragraph is subject to administrative appeal and judicial review under 35 U.S.C. § 203(2). [Negotiated: No license or sublicense shall be granted to a third party prior to the final outcome of such appeal.]



Government reserved rights – non-exclusive royalty-free license to collaboration inventions.

Consistent with the definition of a DAP and pursuant to 15 U.S.C. § 3710a(b)(1)(A) for CRADA Subject Inventions owned solely by VA or jointly by VA and Collaborator and licensed pursuant to the option of Paragraph 6.2 or 6.3, Collaborator grants to the Government a nonexclusive, nontransferable, irrevocable, paid-up license to practice the CRADA Subject Invention or have the CRADA Subject Invention practiced throughout the world by or on behalf of the Government. In the exercise of this license, the Government shall not publicly disclose trade secrets or confidential commercial or financial information that is privileged or confidential within the meaning of 5 U.S.C. § 552(b)(4) or which would be considered privileged or confidential if it had been obtained from a non-Federal party, except where authorized by law.



Government reserved rights – non-exclusive royalty-free License to collaboration inventions made solely by the collaborating company

Template:Pursuant to 15 U.S.C. § 3710a(b)(2), for CRADA Subject Inventions made solely by an employee of Collaborator, Collaborator grants to the Government a nonexclusive, nontransferable, irrevocable, paid-up license to practice the CRADA Subject Invention or have the CRADA Subject Invention practiced throughout the world by or on behalf of the Government for research or other Government purposes.



Government reserved rights – non-exclusive royalty-free License to collaboration inventions made solely by the collaborating company (cont’d)

Negotiated:Pursuant to 15 U.S.C. § 3710a(b)(2), for CRADA Subject Inventions made solely by an employee of Collaborator, Collaborator grants to the Government a nonexclusive, nontransferable, irrevocable, paid-up license to practice the CRADA Subject Invention throughout the world by the Government for research purposes only.



Know what you havewhen working with academic institutions when using government grantswhen licensing out the resulting technology

Government contracts and M&A transactions


IP Warranty

To give or not to give?Biotech vs. Software

Sample provisions

Biotech:“BiotechCo represents and warrants that it owns or holds licenses to the BiotechCo Patents and BiotechCo Know-How and has sufficient rights and power to grant the licenses to PharmaCo which it purports to grant herein.”


IP Warranty (cont’d)

Sample provisions (cont’d)

Software:“SoftwareCo represents and warrants to Customer that: (i) SoftwareCo is the sole and exclusive owner of the Software; (ii) SoftwareCo has full and sufficient right, title and authority to grant the rights and/or licenses granted to Customer under this Agreement; and (iii) the Software does not infringe any patent (to SoftwareCo’s knowledge), copyright, trade secret, trademark or other intellectual property rights of a third party.”


Reversion of rights

Failure to meet diligence obligations

Commercialization of the Product is not scientifically or commercially reasonable

Bankruptcy

Material Breach

Ip For Non Lawyers March 4, 2009

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