IP Essentials: Q&A Series

Q Who can assign rights under a license agreement? A Licensors should carefully consider the conditions under which a licensee may assign their rights in the agreement. In the absence of any expressed provisions, license agreements are typically freely assignable by either party. But this default rule may be superseded by a properly worded assignment clause. Assignment clauses should cover such eventualities as a sale, a merger, or insolvency, as well as a deliberate assignment of the licensed rights. Q Do I want to license the patent or the product? A Another key consideration in any license agreement is the decision whether to license “patents” or specific products. Where specific patents are licensed, the licensee may still be vulnerable to other patents owned by the licensor. Where specific products are licensed, any relevant patents owned by the licensee are deemed to be included in the license. However, new or modified products may not fall under the scope of the license. Q Do I need to have a written license agreement? A Not all licenses require a written agreement. Some will be implied by law. For example, under the “first sale” doctrine, a patent license will be implied when a patent owner sells a product covered by the patent under circumstances that “plainly indicate that the grant of a license should be inferred.” This protects customers from unfair infringement lawsuits.

Q What should be included in a licensing agreement? A The rights given by the agreement generally need to be such that the licensees

You can define the license scope by defining the following: • the possible use of the licensed in- vention (such as non-commercial use only), • the term (such as for a period of one year), • rights to modify the licensed invention, • limitations on licen- sor’s liability, support services, non-disclo- sure of confidential information, indem- nity for infringement, enforcement of rem- edies, or contract ter- mination rights.

are interested in the deal, but you do not give away permanent unrestricted

control over your asset. There are some terms and factors to consider when drafting your agreement. Q Can a license agreement be used as a defense? A It is important to control the transfer or sub-licensing of any rights granted under a patent license agreement. The existence of a valid license agreement may be

a complete defense to a claim of infringement and unwitting patent owners may sometimes grant rights to parent companies, subsidiaries, or affiliated companies unintentionally by failing to scrutinize

IP ESSENTIALS: LICENSING AGREEMENTS

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