IP in Assignments, Licences & R&D Collaborations

Basic IP for Researchers

Royal Society of Chemistry Law Group

May 22, 2012

summary• as a researcher you are likely to use & create IP

• we will consider the 3 basic transactions involving IP that you are likely to encounter professionally:• assignments (transferring IP to new owners)

• licenses (granting rights to use IP)

• R&D collaborations (sharing & creating IP rights)

• we will focus on patent rights

• I’m afraid you will need to face some law!

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Assignments

what is an assignment?• patents (and related rights) are a type of intangible property

and can be exploited as such

• assignmenst transfer IP from one owner to another – it can be a legal or equitable assignment

• a legal assignment allows the new owner (the "assignee") to enforce the right assigned in his own name without joining the previous owner (the "assignor") to the proceedings

• to be valid under English law an assignment:• must be absolute (i.e. not conditional)

• must be in writing

• must be recorded

what is an assignment? (continued)• an equitable assignment requires no formalities but does

require an intention to assign

• it gives rise to a trust with the intended owner as the beneficiary

• always make sure therefore that an assignment is a legal assignment

• title guarantee:• an encumbrance on IP includes, for example, an exclusive licence

or a security charge

• full (no encumbrances)

• limited (potentially encumbered by someone else)

• none (encumbered)

what is being assigned?• a series of inter-related patent rights, each a different items of property

in their own right

• the right to the invention

• the right to the priority application

• the right to claim priority from that priority application

• the right to any other patent applications filed and any granted patents with respect to that invention

an effective assignment• it is important to distinguish between an agreement to assign (the

assignor "will assign" or "agrees to assign") and actually assigning (the assignor "assigns" or "hereby assigns")

• an agreement to assign does not transfer the legal title

• if there is an intention to assign it will create an equitable assignment

• if there is no intention to assign or it is contingent then there may be no assignment at all

consideration for assignments• under English law an assignment drafted as a contract needs

consideration – this can be nominal (e.g. £1) or can refer to another agreement

• an assignment can be drafted & delivered as a deed to avoid the need for consideration

• but deeds are not recognised in every jurisdiction therefore we usually include suitable consideration wording

• transfers between “connected” parties cannot be done at an undervalue

some standard wording

“In consideration of £1 (receipt of sufficiency which is hereby acknowledged) X hereby assigns absolutely with [[full][limited] title guarantee all his/her right, title and interesting in, to and arising from the Invention and the Patents [sic: a defined term] to Y.”

other clauses in assignments• a “further assurance” clause

• may include warranties (sometimes indemnities) – these must be treated carefully

• maybe a revenue sharing provision

• “claw back” rights sometimes

• power of attorney

• often an assignment forms part of a wider agreement – it is important to ensure that it is a legal assignment and effective

• may necessitate the preparation of a "recordal" assignment

who owns the rights? • in the UK (and many other EP states) employers are the successors in

title to inventions devised by their employees if the invention is made:• in the course of their normal duties, or

• in the course of duties specifically assigned to them, and

• the circumstances in either case were such that an invention might reasonably be expected to result from carrying out the employees duties

• an employer nevertheless seek a "confirmatory assignment" to provide documentary evidence of their rights rather than having to prove entitlement by succession

• for the successor in title (e.g. an employer) it is useful documentary evidence often by way of a “confirmatory”assignment

execution of assignments• EPO requires that an assignment is signed by or on behalf of both

parties

• UK & US it is possible for just the assignor to sign

• other EP states require signatures on behalf of one or both parties, sometimes to be witnessed or notarised and some (AU, SP and IT) are very strict and require notarisation and legalisation by Apostille

• we tend to have both parties assign and to have those signatureswitnessed

• we also produce documents for each country (rather than a globalassignment) to ensure local requirements are met, to simplify recordalprocedures and to save translation costs

• you may be asked to sign various different versions of the same assignment (but these should refer to the original assignment)

recording an assignment• recordal provides notice to third parties and may be needed to fully

enforce the rights assigned

• in the UK • a photocopy of the assignment is sufficient plus £50 fee per recordal

application (which can have multiple patents and applications included)

• unless an assignment is recorded within 6 months of the transfer the costs and expenses recoverable by the assignee in any subsequent infringement action will be reduced

• EPO need to file documentary evidence: photocopy of the assignment or a declaration from the assignor plus €95 per EP application

• Key note: record EP applications before validation and PCT applications before national/regional phase to avoid much greater costs!

• other EP states vary

Licences

licensing: the basics• a licence gives consent to use particular IP in

particular way for a particular purpose

• its axiomatic that without the licence the licensee will be infringing the IP

• source of the licence is the owner or a “higher level”licensee entitled to grant a sub-licence

• the right of the licensor to grant the licence is an essential warranty

• a patent licence often also deals with know how (a very different beast)

granting the licence• exclusive – no one else can use those IP rights

• non-exclusive – other parties may be granted the same rights

• sole exclusive – the owner and the licensee only can use the IP

• fully paid up/royalty-bearing/royalty-free

• irrevocable & perpetual – beware the inability to pull the licenceif you are granting it!

• fields of use – carve out subsets of the IP and allows multiple exclusive licences to be granted in different fields

• territory – the world sometimes, but where are the patents filed & granted?

• right to grant sub-licenses

some standard wording

“The Licensor hereby grants the Licensee an exclusive licence (with a right to sub-licence) under the Patents and the Know How in the Field of Use in the Territory to use the Patents and to use, make, sell or otherwise deal in or supply the Licensed Products”.

other licence terms• consideration – the primary driving force of a licence

• royalties, upfront payments, milestone payments, licencefees etc

• deductions & offsets – the devil is in the detail!

• payment terms, accounting and audit rights

• risks & liabilities• warranties – a set of promises that particular facts are true

• indemnities – IP infringement, product liability, breach of confidence

• limitations on liability – caps damages that may be awarded

other licence terms (continued)• technology transfer

• not all the “IP” is disclosed in the patents

• disclosure of know how: the ability to work the invention & general experience

• usually by means of a consultancy arrangement – standard terms & conditions common (money for time)

• performance metrics – sometimes linked to termination rights or some form of service credits/liquidated damages

• development milestones

• market/commercialisation/regulatory milestones

• sales metrics (sometimes linked back to the royalties)

other licence terms (continued)• licenses are inherently anti-competitive

• axiomatic – IP rights create & perpetuate monopolies, but also necessary to stimulate innovation

• hardcore restrictions – price fixing, market or customer allocation etc, the contract becomes void:

• other restrictions – rights to “severable” improvements etc the clause becomes unenforceable

• ending the contract• expiry of patents, material breach

• force majeure & insolvency

• rights following termination – right to sell of stock etc

enforcement of IP in exclusive licences• prosecution & maintenance of the patents

• patent drafting & filings, territories sought – rights of consultation or control?

• who pays for renewals?

• enforcement of the IP rights - what happens if another party infringes the IP or if you are infringing?

• notification of threats & infringements, court proceedings, step-in-rights, awarding of damages

• settlement with consent only

• overlap with other licensees – decisions favourable to one licensee may not be favourable to another

recording a licence• recordal provides notice to third parties (buyers really) that you have

licence to the IP

• in the UK • a photocopy of the licence is sufficient

• its free!

R&D Collaborations

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R&D collaborations• an unincorporated joint venture whereby 2 or more parties work

together on a specific R&D project

• key terms• project scope

• governance

• resources

• budget

• IP

• risks & liabilities (tend to be shared)

• disputes resolution

commercial versus academic collaborations• academic collaborations:

• tend to focus more on the research itself

• can involve many parties (e.g. under FP7 contract), with 1 institution leading

• funded by grants so:• “access rights” can be nebulous – particularly a problem if (a) there is

an industrial partner or (b) valuable IP is generated

• joint IP rights often favoured

• commercial collaborations: • tend to focus more on the outcomes

• usually only involve 2 parties and funded by commercial party:• sole IP rights favoured

• access rights (options/ROFR/licences) critical

a researcher’s primary involvement• defining the project itself:

• objectives – the potential for failure should be built in

• success criteria – sometimes an outcome trigger (e.g. a licence)

• timelines – time should not be of the essence in research

• work plan/research schedule & resource/facility/equipment needed

• project management• managing project sub-team & possibly the wider collaboration

• project deliverables

• managing budget & auditing

• principal supervisor/designated person

• collaboration reports (interim & final)

• IP filing decisions & management

collaboration IP

• “background” IP & “pre-existing know how” – IP that is brought to the collaboration or developed independently of it• “necessary” to the project – be clear what it is

• warranties & indemnities may be expected from the licensors (especially in a commercial collaboration)

• “arising” or “foreground” IP – IP created under the collaboration• how is it owned?

• beware joint ownership

• future access: options & rights of first refusal – often the key value driver in a commercial collaboration

• often not warranted

governance• usually some form of “steering committee”

• the areas of competency of the committee to be decided in the contract – for example:• overall management/supervision of the project

• reviewing collaboration reports & deciding on milestones

• managing IP disclosure process

• high level budget & project management

• dispute resolution

• often required to hold regular meetings and to vote (quorum required and votes may be binding or not)

• the parties to the contract remain liable – a steering committee does not waive liability!

other common types of IP agreements that you may encounter• confidentiality agreements (also called non-disclosure

agreements):• protect confidential information/know how/trade secrets

• duty of confidence may exist, but contracts easier to enforce

• should identify the type of information being disclosed, the purpose which it can be used, the exemptions from confidentiality & the term of the obligations

• material transfer agreements:• regulate the use, supply & return of the materials

• ownership of “arising” IP, dealing with derivatives – beware of “reach through rights”

• some materials are highly regulated (e.g. human tissue) which imposes particular rules that need to be considered

summary & words of advice• assignments – be clear on what is being assigned

and make sure it is a legal assignment

• licenses – be clear on what is being licensed and how this interplays with the rest of IP estate

• collaborations – it tends to be more about the process of arriving at the outcomes

• contracts always take longer to negotiate than anticipated

• make sure you understand commercial and legal impact of the terms

QUESTIONS?

Dr Sean Jauss, Head of Legal Teamsean.jauss@mewburn.com

Mewburn Ellis LLP22-24 Queens Square

Bristol BS1 4NDTel: +44 117 945 1234

Fax: +44 117 926 5692