IP LICENSING SPRING 2015 MCDONALD
EXAM TIPS:
-Pay attention to LEE and LOR
-Pay attention to type of IP (think LOR estoppel for example)
-On MC pick the best answer, there will be some multiple/multiple choices
-Must read carefully to avoid things that sound good but aren’t, for example: an answer may sound right…”don’t have to pay when a trade secret becomes public” but a later answer may say “unless the contract is clear that you do”….OR an answer may say “unless the contract clearly says so – -usually a good answer, but a subsequent answer might say “it’s contrary to law” in which case what’s written may not matter, like the right to challenge a patent….
(From class)
-Don’t combine trade secret and patent (there’s a reason why there are bifurcated; i.e. don’t pick an answer that protects trade secret based solely on patent expiration. Two separate things)
-When valuing IP, cost-basis method is last resort, don’t base opinion solely on an accounting firm, 25% rule has been tossed out because it has to be based on fact
-Set of questions-three different clauses and whether one can or cannot do something.
-Overlap between patent and field of use (scopes)
-Not likely to be on test….
-IP strategies (future mapping etc.) (p. 4)
-IP licensing strategy development and value chains (p. 11)
-Negotiating- everything BUT ATN (p. 13)
-IP Awareness- Trade Secret Policy (p. 17)
-p.24; terms representations, warranties, and indemnities
-Really important…
-Confidentiality Agreements (p. 18)
Practice Questions: Antitrust, Tax and Copyright Services
1. In a third party development agreement where a wide variety of copyrightable works may be created by a consultant and are intended to be owned by the party contracting with the consultant
-The copyrightable works are owned by the party hiring the consultant because she is an employee
-The copyrightable works are owned by the consultant because they are not a “work for hire”
-The party owning the work depends on the nature of the work and certain contractual language
-None of the above
2. Where technology is developed by an American company and used by its Polish affiliate:
-Only Polish tax law should be reviewed because the use of the technology only takes place in Poland
-No agreement for use of the technology is needed, because the companies are affiliates
-US tax authority may set any royalty rate if wants for the Polish affiliate’s use of technology, if an agreement does not establish the rate
-An intra-company license agreement should be used to set the terms of the Polish affiliate’s use of the technology, including but not limited to an arm’s length royalty rate
-A tax receipt for taxes paid in Poland will always be usable in US
3. If a licensee is in bankruptcy
-You should look at Section 365(n) of the bankruptcy statute to determine what may happen
-you should look for an ipso facto clause in the license, because if there is one, the license probably terminated when the licensee entered bankruptcy
-you should determine whether there are obligations remaining to be performer by the licensor and licensee
-none of the above
4. The US Dept. of Justice considers two markets when analyzing IP anti-trust issues – the Technology Market and the Innovation Market. FALSE (technology, innovation, AND product market)
Mergers, Acquisitions and International Licensing
1. In a sale of a business in which computer software is required to conduct that business
-The purchase assets of the “business” in a Purchase and Sale Agreement should include all software used in the business
-In due diligence conducted by the Buyer prior to closing, the Buyer should confirm that all software licenses are transferable to, or otherwise obtainable for the Buyer
-The Seller should confirm that all software required to operate the business will be transferred to Buyer in accordance with the requirements of each software vendor’s license agreement, or that any non-transferable software may be licensed to the Buyer from another
-A and B
-B and C
2. If you are the Buyer of the business, the most preferable definition of assets to be transferred to or licensed to the Buyer, assuming the definition is properly supported throughout the transaction documents, would be:
-All IP assets used in the business as of the Effective Date
-All IP assets used or useful in the Business as of the Effective Date
-All IP assets used in Business
-All IP assets used or useful in the Business
(If Seller…A)
A Buyer of a business should always insist on a representation that the IP assets licensed or transferred under the Purchase and Sale Agreement and any related documents includes a representation that the Buyer has reviewed the IP to be transferred or licensed, and that the IP is sufficient to operate the business. FALSE (Buyer isn’t getting anything—as a Seller you would like this)
UPSIDES OF LICENSING
-Income through royalties and other payments
-Leverage your technology into new markets
-Head start to new businesses
-Sharing of developments through cross-licensing
-Good will/ brand enhancement
DOWNSIDE OF LICENSING
-Loss of control of technology market
-Loss of trade secret information
-Establishes competitor
-Can’t change licensing attorney once a license
claim based on promissory estoppel a plaintiff must allege and prove that: (1) defendants made an unambiguous promise to plaintiff; (2) plaintiff relied on such promise; (3) plaintiff’s reliance was expected and foreseeable by defendants, and; (4) plaintiff relied on the promise to its detriment. P’s reliance must be reasonable and justifiable. P may recover on a theory of promissory estoppel despite the absence of a contract.
-Always write what you need, NEVER rely on default rules or presumptions to protect your position.
BASIC IP RIGHTS:
-Patents
-Trade Secrets
-Copyright
-Trademarks
-Right of Publicity
-Understand the basic rights concepts in each IP type that can be licensed
-Remember, when doing a license or any other transaction involving IP, inventory all the IP and ask yourself where the rights should reside post license (LEE or LOR). This way all rights are accounted for, and neither party is left without a required IP right.
IP STRATEGIES:
-Future Mapping
-Portfolio “stuffing”
-Project Specific
-Freedom to Operate (“FTO”)
-Trading Assets
-Brand Expansion/Enhancement
-Remember the best strategies are holistic strategies that incorporate all of the most cost effective and enforceable elements of the licensable subject matter – don’t just license a patent or trade secret if licensing the related brand or software will increase revenue and better deter third party copying.
Factors to Consider in Developing IP Licensing Strategies – Trade Secret Advantage
-Potentially long term of protection
-Low cost, but may incur costs to maintain secrecy
-Can protect unpatentable subject matter
-Can be licensed, and the license can be for a potentially unlimited term
-Does not require public disclosure
Factors to Consider in Developing IP Licensing Strategies – Trade Secret Disadvantages
-Requires reasonable protection [a trade secret program in place]
-Does not prevent others from working in your field or creating the same “trade secret”
-Probably does not preclude others from subsequently patenting subject matter practiced in secret
-Not applicable if the trade secret is easily reverse engineered
-Difficult to recover if misappropriated
