7Patents New (Novelty): Useful (Utility): Never been done, used, written about beforeMade available to the publicUseful (Utility):It worksIt achieves the promise
8Patents Inventive (non-obvious): Any idiot would not have thought of itA person of ordinary skill in the areaWith no inventive abilitiesWould have been led to the solutionDirectly and without difficulty
9Trade-marks Names Logos Product packaging Shape of product Earned by useRegistration gives Canadian rights
10Trade-marks Key: distinctiveness Must link products or services to a unique source
11Copyright Protects “works” books movies music artwork computer programsProtects “expression”, not ideasArises automatically, but can be registered
20ConsequencesSociety of Composers, Authors and Music Publishers of Canada (SOCAN)a not-for-profit corporation; collective under the Copyright Act.SOCAN grants music licenses, then distributes the royaltiesIIC Enterprises Ltd. runs nightclub in Kelowna, BCUnpaid royalties: $20K unpaid for Oct to 2011Court awarded statutory damages of six times the normal royalty. $122K(Copyright Act allows for an award of up to ten times the normal royalty)SOCAN v. IIC Enterprises Ltd., 2011 FC 1088
21Licensed use becomes unlicensed Visibility Corp. sues for copyright infringement re software.Visibility had previously granted a software license to the defendants’ parent companydefendants were merged but continued to use the software, now without a license.License agreements prohibited transfers of the software without Visibility’s consent. Visibility Corp. v. Hudson Prods. Corp., RGS (D. Mass. Dec. 30, 2010)
22You’ve got licensesSharing Your Content and Information You own all of the content and information you post on Facebook, and you can control how it is shared through your privacy and application settings. In addition: For content that is covered by intellectual property rights, like photos and videos (IP content), you specifically give us the following permission, subject to your privacy and application settings: you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook (IP License).
23Skeleton of a License Agreement The Big Question:WHO GETS WHAT?
24Skeleton of a License Agreement Three building blocks License SkeletonWho: The PartiesGets: The GrantWhat: The DefinitionsLicensor LicenseeDefinitionsThe Grant
25IP License Agreement - WHO Who has the right to grant the license?Ownership of the intellectual property?Licensed to sublicense the intellectual property?Warranty of licensor’s ownership?
26Many different relationships between licensor and licensee Licensee may be ‘customer’License may be business arrangement between affiliates
31Clear Drafting is Essential The comma case - 14 page contract:Rogers’ five-year, renewable agrt to attach cable lines across Bell Aliant utility poles in the Maritimes. $9.60 access fee per pole. Aliant terminated. Price raised. Approx $1m cost differential at stake.Agreement “shall continue in force for a period of five years from the date it is made, and thereafter for successive five year terms, unless and until terminated by one year prior notice in writing by either party.”Rogers loses initially, wins on appeal b/c of unambigious French version of contract. (Telecom Decision CRTC )
322156775 Ontario Inc. v. Just Energy, 2014 ONSC 3276 (CanLII) Enforceability of arbitration clause in dispute.Plaintiff alleges agreement void due to lack of signing authority, misrepresentation. Defendant Tried to force arbitration. The arbitration clause:“Customer may contact Just Energy with regard to a concern or dispute under this Agreement… such a dispute will be referred to and finally resolved by binding arbitration pursuant to Governing Law, before a single arbitrator…”Clause only applied to disputes “under” the agreement?Covers disputes pertaining to the validity of the agreement?Narrow wording used so the defendant could not enforce the arbitration clause.To enforce clause in validity situation, use broader wording, such as, “in relation to” or “in connection with.”
33IP License Agreements - WHAT WHAT DOES THE LICENSEE GET?What IP rights are being granted?copyright, trade secrets, patents, know-howif trade secrets, include confidentiality provisions
34IP License Agreements - WHAT WHAT DOES THE LICENSOR GET?$$$$License feesRoyaltiesCross-licenses
35License Grant – the Asset What it ProtectsPatents Function or CompositionTrademarks Brand Names and LogosCopyright The Form of InformationTrade Secrets / The Secrecy of an idea Confidential Info
36License Grant Licensor Licensee Definitions The Grant Licensor hereby grants License Skeleton to Licenseea nontransferable, nonexclusive right and license to usethe Licensed PatentsIn the Territory, solely for the purpose of manufacturing and selling the Licensed ProductsLicensor LicenseeDefinitionsThe Grant
37License Grant What is the Licensee allowed to do? Patents: make, use, sellTrade-marks: useCopyright: copy, publish, translate, perform, modify, create derivative worksTrade Secrets: make, use, sell product made with trade secret
38License Grant – all or part of asset? What is the Licensee allowed to do?Exclusive: only the LicenseeSole: only the Licensee and the LicensorNon-exclusive: multiple Licensees
39Headlines - GrantAmorfix and JSW Sign LOI for Exclusive Worldwide License of Preclinical Alzheimer's Disease Diagnostic Technology. January 9, 2012AJ, ATCC sign worldwide non-exclusive licensing agreement for iPS cell patent portfolio. June 15, 2011.February 14, OTI Signs $7 Million Core Technology License Agreement. November 30, 2011.
40License Grant What is the Licensee allowed to do? Territory: use the Licensed Trade-marks to promote, sell and distribute products in Canada and the United StatesField: use the Licensed Patents to develop a therapeutic product to treat diabetesSublicense: modify the source code of the Licensed Software to create the Integrated Software and sublicense the object code of the Integrated Software to end-users
41Headlines - TerritoryBTG Plc – Voraxaze® / Glucarpidase Licensed to Ohara Pharmaceuticals in Japan. December 7, 2011.IntelGenx Announces License Agreement for the Commercialization of CPI-300 in the United States.
42License Grant What is the Licensee not allowed to do? non-competition no reverse engineeringno misuse of confidential informationsublicenseuse outside scope of grantQuery: which of the above are also prohibited by common law or IP rts?
43Consideration How much is the license worth? ¢¢¢ $$$Non-Exclusive ExclusiveSmall Territory Large TerritoryNarrow Field Broad Field“Use” “Exploit”Technological TechnologicalConvenience Breakthrough
44ConsiderationLicense Fees (Fixed)Initial or UpfrontAnnualMilestone
45Consideration Royalties (Fixed or Variable) 5$ per widget sold 5% of “Revenue” per widget sold“Net Revenue”“Sales Revenue”“Profit”“Allocated Price”
46UofT examples – license in MS Office Standard $74SharePoint database server $131Restrictions: For UofT departments, faculty and staff on UofT owned workstations(query: who is licensee?)Perpetual licenseNo support or upgrades
47UofT examples – license out Fields: Clothing, Uniforms, Promotional items, FurnishingsConsideration: $120/yr license fee + 8% royalty on wholesale cost of productRoyalty report within 30 days of each quarter.Licensees must get $2m product liability insurance
48Consideration Minimum Royalty Commitment Tied to exclusivity Quotas per Territory, Product line or TotalMaximum Royalties PayableCap on Amount (aggregate of royalty payments)Cap on Time (duration of royalty payments)“Stacks” (total percentage of 3d party royalties)“Most Favoured Nation”“Substantially Similar”
49Consideration Reports May be tied to payment of royalties Periodic reports (monthly, quarterly, annual)Certified?use outside scope of grantAuditsShould be conducted regularly
50Maximizing royalty revenue Issue more licensesmore licensees/sublicensees, new fields, new territories etc.More volume of sales under licensemarketing/advertising, incentives to licenseesHigher royalty per sale under licenseVerify royalty payments
51Headlines: more licenses and more licensed products = $$ CryptoLogic Reports Profit and Revenue Growth in 2011DUBLIN, IRELAND--(Marketwire - March 8, 2012) - CryptoLogic …a developer of branded online betting games and Internet casino software…. Branded Games revenue increased 25% to $6.9 million in 2011 (2010: $5.5 million), accounting for approximately 25% of total revenues (2010: 21%). In Q4 2011, revenue from this segment increased to $1.9 million (Q3 2011: $1.4 million). The increase in Branded Games revenue is primarily due to the increased number of revenue producing games through an increased number of licensees and games per licensee.
52Consideration Other Consideration Cross-license Shares/ Stock/ Equity Joint Venture arrangements
54Obligations - Licensor What does the Licensor have to do?Deliver the Intellectual PropertyModify/Improve the Intellectual PropertyEnforce the Intellectual PropertyDefend against claims of Infringement
55Obligations - Licensor Deliver the Intellectual PropertyDisclose Know-HowTrain Licensee PersonnelSupport and MaintenanceDisclose/Deliver Improvements and Modifications
56Obligations - Licensor Improvements – a development in the field of the licensed intellectual property that enhances one of the following:UsabilityFunctionalityEfficiencyPerformance
57Obligations - Licensor Improvements can be deemed included in license grantNo additional payment requiredMay extend life of payment termsLicense may be offered a right of first refusalAllows Licensor to negotiate additional $$$Improvement may not be usable without base technology
58Obligations - Licensor EnforcementProsecute and maintain registrationsTake action against infringersKeep other licensees “in line”Defend against challenges to the validity of the intellectual property
59Obligations - Licensor Infringement ClaimsIP litigation can be VERY expensive and VERY riskyLicensor may not want to bear the risk – will factor into overall value of licenseConsultation, cooperation typically requiredGet settlement approval by licensee, divide litigation proceeds
60Obligations – Licensee What does the Licensee have to do?“Work” the InventionMaintain Quality StandardsDisclose and Deliver ImprovementsIndemnification/ InsuranceSafeguard Confidential Information, Non-Compete, Non-Solicit
61Obligations – Licensee “Working” the InventionTied to exclusivityMay incorporate “quotas”Covenant to use “commercially reasonable” efforts to promote, distribute and sell products
62Obligations – Licensee Quality StandardsCritical in trade-mark licensesLicensor entitled to inspect samples and auditGood practice to provide Licensee with specifications for mark use (e.g. dimensions, colours) and legends
63Obligations – Licensee ImprovementsThese are “Licensee” improvementsLicensor may require disclosure, and a license backBeware of “blocking” patents
64Obligations – Licensee Indemnification and InsuranceFlip side to infringement indemnityProduct liability concerns also VERY scary and VERY expensiveIndemnity limited by Licensee’s activities (i.e., is the Licensee manufacturing?)In trade-mark licenses, product liability can be damaging to goodwill in owner’s mark
65Common ClausesAssignmentTerm and TerminationConflict Resolution
66Common Clauses Assignment Usually require consent to assign or in the event of a change of controlMay wish to withhold if assigned to a competitorGuarantee from original licensee?
67Common ClausesTermTerm may be dependent on intellectual property rights
69Contract term re expiry Gerhard Reichert and a co-inventor created the window insulator called "Super Spacer"Lauren Intl bought Super Spacer patents and patents for 2 other potl products.Lauren agreed to pay Reichert and his co-inventor a royalty of 1% each on gross sales under the patents. Reichert earned > $2 million in royalties.Lauren International, Inc. v. Reichert,  ONCA 382, affirming  CanLII 44351
70Contract term re expiry The patents for the Super Spacer and the other two products were filed in different countries on different dates and had different expiry dates.The Super Spacer patents expired on dates between , while the patents for the other products expired as late as 2011.patent royalty payments were, "ending on the expiry of the Principals' Patent Rights."
71Common Clauses Termination No matter how friendly the parties are, conflicts may arise – employees depart, market conditions change, etc.Better to plan ahead, while the parties are still on good terms
72Common Clauses Termination By Licensor: Failure of Licensee to pay royaltiesBreach of Confidential InformationFailure to exploitBy LicenseeInvalidity of PatentsInfringement Claim
73TerminationRevision: April 26, 2011.Sharing Your Content and Information …This IP License ends when you delete your IP content or your account …
74TerminationRevision: April 26, 2011.Sharing Your Content and Information …This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.
75Trade secret blend of 11 herbs and spices Trade secret blend of 11 herbs and spices. KFC’s Original Recipe was first perfected by KFC founder Colonel Sanders more than 60 years ago in Kentucky. In fact, the recipe is so secret, that, to this day, it’s locked away in a high-security vault in Louisville, Kentucky.Query: special terms with licensees re use of Tm, trade secret recipe?
76Soricimed company Shrew venom peptide - five US patents. Treatments: Cancer, wrinkles, analgesiaDiagnostics, drug deliveryThe drugs home-in on lymph nodes and deliver a fluorescent molecule (drug) to them.A fluorescent marker attached to the peptide detects ovarian tumours.
77Isys companyIsysTechnology for identifying defects in fish fillet, adapted for automated ‘red eye’ reduction in photos
79Assignments IP – exclusive rights (monopoly) eg. patent: exclusive right to make, use, sellAssignable in whole or part
80Co-ownership More complex rules Can’t stop co-owner from using inventionAbility of co-owner to assign or license?
81Co-ownership Can assign entire ownership rights Licensing co-ownership interest without consent of other co-owner?Forget v. Specialty Tools of Canada Inc.(1995), 62 C.P.R. (3d) 537 (B.C.C.A.), aff’g (1993), 48 C.P.R.(3d) 323 (B.C.S.C.).
82Georgina and Daniel Forget coowned patent for a scissor-type tube-cutter Daniel licensed the cutter --- Specialty Tools of Canada Inc. – right to mfr and sell in CanadaGeorgina was cut out of the action
83Co-owner can assign entire interest in a patent to a third party without the consent or an obligation to account to the other co-owner.Cannot dilute the rights of the other co-owner.Co-owner cannot grant a valid license without consent: icense not valid - would dilute the rights of the other co-owners. Patent infringement by licensee.
84Best practice to avoid dispute Co-owners should make their own agreement governing commercialization
87WiLAN Provides Litigation Update 03/08/2012Download this Press Release (PDF 61 KB)OTTAWA, Canada – March 8, 2012 – Wi-LAN Inc. (TSX:WIN) (NASD:WILN) today provided a litigation update.In January 2010, WiLAN sued LG Electronics…for infringement of WiLAN’s V-Chip patent (U.S. Patent No. 5,828,402) in the United States District Court, Southern District of New York. ….About WiLANWiLAN, founded in 1992…has licensed its intellectual property to over 255 companies worldwide. Inventions in our portfolio have been licensed by companies that manufacture or sell a wide range of communication and consumer electronics products including 3G and 4G handsets, Wi-Fi-enabled laptops, Wi-Fi and broadband routers, xDSL infrastructure equipment, cellular base stations and digital television receivers. WiLAN has a large and growing portfolio of more than 3,000 issued or pending patents.