Checklist of issues to address in patent license transactions

In this economy, everyone is looking for ways to make the most of their money. The internet is a fountain of information and resources to self-educate and DIY. For legal matters, there are hundreds of sample contracts available online. So many people presume that simply copying what someone else did will do the trick and save money. Like always, you will probably get what you pay for. What’s more is that what you don’t know can hurt you, and for years to come. There is rarely a way to “undo” a costly mistake in a negotiated contract. Leaving out an important clause or wording something incorrectly can be a devastating error, especially when an asset like a patent is on the line.

There are complex issues in a patent license agreement and many “hidden risks” for the unwary. No two transactions are alike and there is no one size fits all template out there. Many businesses, and even general business attorneys, may be tempted to negotiate and draft an agreement without expert patent counsel assistance. If you decide to take the self-help route, I recommend that you research the following issues so you are adequately prepared for the task at hand. The law is constantly evolving, so being up-to-date is important to get a legally compliant transaction and one that is best suited for your situation.

  • Ambiguous or incomplete grant clause
  • Sublicense Issues
  • Implied License issues
  • Exhaustion issues
  • Foundry Issues
  • Government approval issues
  • Co-owner issues
  • Inventor Compensation Issues
  • Currency conversion issues
  • Sale vs. license issues, including transfer pricing
  • Tax issues
  • Securing payment (collateral) issues
  • Term length issues, especially hybrid licenses and multi-country licenses
  • Misuse claims
  • Restriction on ability to seek lost profits damages
  • Title and transferability issues
  • Bankruptcy issues
  • Enforcement issues

If you would like some guidance, but your budget won’t allow for traditional full scope legal representation, you may be able to consult a patent attorney on a limited-representation basis to review your agreement and advise you of options for proceeding, or provide potential language suggestions to give you the best possible deal in your negotiations. Many law firms now offer this level of service, including Tracy Jong Law Firm.