kevin w l croft drafting a licence agreement national advanced training program on successful...

KEVIN W L CROFT

Drafting a Licence Agreement

National Advanced Training Program on Successful Technology LicensingJakarta, June 2015

© K Croft, Croft IP, 2015

Croft IP

● Established 2005

● Based in Australia, works with clients around the world

● Assists clients to improve returns on their investment in

the intellectual property they create and use

● Strategy Policy IP management

Procedures Deals Skills development

● Collaborates enthusiastically and effectively with a

range of professionals


Kevin W L Croft

● Intellectual property commercialisation professional since 1986

● Heads consulting company – Previously worked in universities & companies

● Consults to industry, government, WIPO, UNESCO, inventors & universities

● External member, CSIRO Commercial Executive Committee 2007 to 2010

● Trustee, Licensing Executives Society, Australia and New Zealand 2000-2009

● Board Member, Association of University Technology Managers 2004-06

● Graduate of the Australian Institute of Company Directors course

● Certified by the Licensing Executives Society International as a trainer in

intellectual property management and licensing

● AUTM President’s Award 2007 for championing technology transfer and the

Association’s international development


What does a good licence do?

Establishes an enduring commercial relationship between the parties

Meets legal, financial, and commercial objectives of all the parties

Provides a means for addressing and resolving unanticipated issues that may arise over time

Clearly expresses its purpose and the obligations of the parties when read by

someone else© K Croft, Croft IP, 2015

Who should draft the licence?

• Know the common ways to draft a legal document

• Address the legal issues• Want the document to

protect the rights of the client

Lawyers Negotiators

• Know the deal• Know the spirit of the

negotiation• Want the agreement to be

positive and encouraging


Who should draft the licence?




Lawyers Negotiators• Know the deal• Know the spirit of the




A good licence

Is as unique as the transaction

• While precedent is useful, and some conditions may not be negotiable, the terms of licences you have done before should not constrain the licences you negotiate today and in the future


Who drafts the licence?








Lawyers Negotiators

The structure of a licence


• Preamble• Recitals• AGREEMENT• Definitions• Grant• Reservations• Improvements• Consideration• Reporting and accounting• Duration

• Warranties and Indemnities• Measures of performance• Auditing performance• Right to vary and terminate• Jurisdictional issues• Dispute resolution• Signatories• Other issues – publicity,

ancillary rights, …

Examples of university technology transfer


Preamble and Recitals

• Preamble– Identifies the parties to the

agreement

– Needs to be clear and precise


• Recitals– Describes the background

of the relationship

– Is descriptive and is not part of what is agreed

Preamble

Licence agreement between

Academic University, a body corporate established by the Academic University Act, 1980, located at University Street, Surfer’s Paradise in the State of Queensland, Australia (“Academic”) AndEntrepreneurial Business, a company having its registered business address at 5 Kangaroo Street, Brisbane in the State of Queensland, Australia (“Entrepreneurial”)


Recitals

WhereasAcademic has developed technology relating to _______ (“the

technology”) and owns the patents, patent applications, and other registered intellectual property listed in Annexure A

Academic has developed and owns commercially valuable confidential information and know how relating to the technology

Entrepreneurial has sought an exclusive licence of the patents, patent applications, other registered intellectual property, confidential information and know how owned by Academic and related to the technology on the terms and conditions set out in this agreement


The Agreement

EVERY agreement must state clearly what has been agreed

If something isn't stated in the Agreement, it has not been agreed

Conversation and acknowledgement aren't part of what is agreed - even if there is something in writing


The Agreement

"It is hereby agreed between the Parties"

"The Parties hereby agree"

"It is agreed between the Parties as follows:"


Definitions

Clear definitions of terms used in an agreement make it easier to understand

Consistent use of defined terms is essential.Spelling may be critical.

If you define "Technology" as "all intellectual property, including all registered and unregistered intellectual property licensed by University to Entrepreneurial under this Agreement" if you use the word "technology" in the Agreement, it doesn't have the same meaning as the defined term


Grant

The grant clause is a critical component of every licence. It sets out the rights of the licensee.

Who is licensed? The licenseeSubsidiaries? Associated entities? (be careful to

ensure clear definitions)

Exclusive, non-exclusive, or sole licence?

Right to sublicense must be explicit


Grant

Territory - In whah jurisdictions is the licence granted?

Duration - State a clear duration, not just "the life of the patent".

Field of use


Reservations, grant backs, and Improvements

Reservations are clear statements of rights reserved by the licensor. A university should reserve the right to continue to utilise the licensed IP for research and own the results of that research.

A grant back is an obligation for a party to use IP that is created after the licence is executed.

Improvements include all additional IP developed after the licence is executed where that IP can only be practised by a party that a right to use the licensed IP


Reservations, grant backs, and Improvements


Consideration

What the licensee gives the licensor in exchange for the rights granted under the licence


Consideration


Reporting and accounting


Duration

How long does this deal endure?


Duration

Life of the patent


Warranties and Indemnities

A warranty is a guarantee of performance

An indemnity is an agreement to protect the other party from loss



What does the Licensor warrantThat it owns the licensed IPThat it has the authority to license the IP

What does the Licensee warrantThat it has authority to enter into the licence



What does the licensor NEVER warrant?Validity of the patentThat the IP can be practisedThat the licensee will make money


Measures of performance


Auditing performance


Rights to vary and terminate


Jurisdictional Issues


Dispute resolution

Disputes happen

Take a staged approach to resolving disputes

IF you don't agree,• University Vice President and senior representative of

the licensee• External mediation - An expert listens to both parties

and then recommends a resolution• Arbitration - An expert listens to both parties and

determines the resolution. The parties must abide by the decision of the arbitrator.


Signatories

Make sure that the person signing the agreement is authorised to do the deal.


Other issues

PublicityDo the parties agree to publicise the existence of

the licence?

Ancillary rightsUse of the university's name, symbols and

trademarks


Other issues

Publicity

Ancillary rights


Exclusion from challenging the patent

It is wise for a licensor to require the licensee to agree never to challenge the patent that is the subject of the licence. This is especially true when there is a lot of valuable confidential information in the licence.


Severability

This clause states that if any of the provisions of the agreement are determined to be ineffective, or even in breach of law, then the rest of the agreement will remain in effect.


Examples of university technology transfer


Managing IP in agreements between Research Institutions and Industry


RecitalsWhereasAcademic has developed technology relating to _______ (“the

technology”) and owns the patents, patent applications, and other registered intellectual property listed in Annexure A

Academic has developed and owns commercially valuable confidential information and know how relating to the technology

Entrepreneurial has sought an exclusive licence of the patents, patent applications, other registered intellectual property, confidential information and know how owned by Academic and related to the technology on the terms and conditions set out in this agreement

Jurisdiction and Applicable Law

• Jurisdiction is a matter of negotiation• The licensor is usually in the driving seat

- PROVIDED THAT there is a balance in the negotiations


KEVIN W L CROFTMANAGING DIRECTOR

CROFT IP PTY LTD

Ph: 0407 219208

[email protected]

Thank you




positive and encouragingKnow the common ways to draft a legal document




Who should draft?Lawyers




Negotiators




IP in your company’s business

Trade mark(s)Business name registration

Domain name registration

Trade marksBusiness name registrationPatentsDomain name registrationConfidential information Laboratory procedures Formulations Supplier information Product information Customer data

Confidential Information Recipes Supplier information Customer data

Definitions

Licences typically define terms like:

Improvements


Key parts of a licence • Preamble• Recitals• AGREEMENT• Definitions• Grant• Reservations• Improvements• Consideration• Reporting and accounting• Duration

• Warranties and Indemnities• Measures of performance• Auditing performance• Rights to vary and terminate

the licence• Jurisdictional issues• Dispute resolution• Signatories• Other issues – publicity,

ancillary rights, …

kevin w l croft drafting a licence agreement national advanced training program on successful...

Documents

croft ipestablished

legal documentaddress

legal issueswant

partiesmeets legal

common ways

commercial objectives

board member

good licenceis