KEVIN W L CROFT Drafting a Licence Agreement National Advanced Training Program on Successful Technology Licensing Jakarta, 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 ● StrategyPolicyIP management Procedures DealsSkills development ● Collaborates enthusiastically and effectively with a range of professionals © K Croft, Croft IP, 2015

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 ● Board Member, Association of University Technology Managers ● 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 © K Croft, Croft IP, 2015

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 LawyersNegotiators Know the deal Know the spirit of the negotiation Want the agreement to be positive and encouraging © 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 LawyersNegotiators Know the deal Know the spirit of the negotiation Want the agreement to be positive and encouraging © K Croft, Croft IP, 2015

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 © K Croft, Croft IP, 2015

Who drafts the licence? © K Croft, Croft IP, 2015 Know the common ways to draft a legal document Address the legal issues Want the document to protect the rights of the client Know the deal Know the spirit of the negotiation Want the agreement to be positive and encouraging LawyersNegotiators

Who drafts the licence? © K Croft, Croft IP, 2015 Know the common ways to draft a legal document Address the legal issues Want the document to protect the rights of the client Know the deal Know the spirit of the negotiation Want the agreement to be positive and encouraging LawyersNegotiators

The structure of a licence © K Croft, Croft IP, 2015 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 © K Croft, Croft IP, 2014

Examples of university technology transfer © K Croft, Croft IP, 2014

Preamble and Recitals Preamble – Identifies the parties to the agreement – Needs to be clear and precise © K Croft, Croft IP, 2015 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”) And Entrepreneurial Business, a company having its registered business address at 5 Kangaroo Street, Brisbane in the State of Queensland, Australia (“Entrepreneurial”) © K Croft, Croft IP, 2015

Recitals Whereas Academic 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 © K Croft, Croft IP, 2015

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 © K Croft, Croft IP, 2015

The Agreement "It is hereby agreed between the Parties" "The Parties hereby agree" "It is agreed between the Parties as follows:" © K Croft, Croft IP, 2015

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 © K Croft, Croft IP, 2015

Grant The grant clause is a critical component of every licence. It sets out the rights of the licensee. Who is licensed? The licensee Subsidiaries? Associated entities? (be careful to ensure clear definitions) Exclusive, non-exclusive, or sole licence? Right to sublicense must be explicit © K Croft, Croft IP, 2015

Grant Territory - In whah jurisdictions is the licence granted? Duration - State a clear duration, not just "the life of the patent". Field of use © K Croft, Croft IP, 2015

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 © K Croft, Croft IP, 2015

Reservations, grant backs, and Improvements © K Croft, Croft IP, 2015

Consideration What the licensee gives the licensor in exchange for the rights granted under the licence © K Croft, Croft IP, 2015

Consideration © K Croft, Croft IP, 2015

Reporting and accounting © K Croft, Croft IP, 2015

Reporting and accounting © K Croft, Croft IP, 2015

Duration How long does this deal endure? © K Croft, Croft IP, 2015

Duration Life of the patent © K Croft, Croft IP, 2015

Warranties and Indemnities A warranty is a guarantee of performance An indemnity is an agreement to protect the other party from loss © K Croft, Croft IP, 2015

Warranties and Indemnities What does the Licensor warrant That it owns the licensed IP That it has the authority to license the IP What does the Licensee warrant That it has authority to enter into the licence © K Croft, Croft IP, 2015

Warranties and Indemnities What does the licensor NEVER warrant? Validity of the patent That the IP can be practised That the licensee will make money © K Croft, Croft IP, 2015

Measures of performance © K Croft, Croft IP, 2015

Measures of performance © K Croft, Croft IP, 2015

Auditing performance © K Croft, Croft IP, 2015

Auditing performance © K Croft, Croft IP, 2015

Rights to vary and terminate © K Croft, Croft IP, 2015

Rights to vary and terminate © K Croft, Croft IP, 2015

Jurisdictional Issues © K Croft, Croft IP, 2015

Jurisdictional Issues © K Croft, Croft IP, 2015

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. © K Croft, Croft IP, 2015

Signatories Make sure that the person signing the agreement is authorised to do the deal. © K Croft, Croft IP, 2015

Other issues Publicity Do the parties agree to publicise the existence of the licence? Ancillary rights Use of the university's name, symbols and trademarks © K Croft, Croft IP, 2015

Other issues Publicity Ancillary rights © K Croft, Croft IP, 2015

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. © K Croft, Croft IP, 2015

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. © K Croft, Croft IP, 2015

Examples of university technology transfer © K Croft, Croft IP, 2014

© K Croft, Croft IP, 2015

Managing IP in agreements between Research Institutions and Industry © K Croft, Croft IP, 2015

Recitals Whereas Academic 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 © K Croft, Croft IP, 2015

KEVIN W L CROFT MANAGING DIRECTOR CROFT IP PTY LTD Ph: Thank you © K Croft, Croft IP, 2015

Know the deal Know the spirit of the negotiation Want the agreement to be positive and encouragingKnow the common ways to draft a legal document Address the legal issues Want the document to protect the rights of the client © K Croft, Croft IP, 2015

Who should draft? Lawyers Know the common ways to draft a legal document Address the legal issues Want the document to protect the rights of the client Negotiators Know the deal Know the spirit of the negotiation Want the agreement to be positive and encouraging

Know the common ways to draft a legal document Address the legal issues Want the document to protect the rights of the client © K Croft, Croft IP, 2015

IP in your company’s business Trade mark(s) Business name registration Domain name registration Trade marks Business name registration Patents Domain name registration Confidential information Laboratory procedures Formulations Supplier information Product information Customer data Confidential Information Recipes Supplier information Customer data

Definitions Licences typically define terms like: Improvements © K Croft, Croft IP, 2015

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, …

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, …