R. David Donoghue, author of Chicago IP Litigation blog and Practice Center Contributor, recently attended the 9th Annual Rocky Mountain IP & Technology Institute.  David will be writing several articles on the highlights from the Institute.  The first two articles  focused on the Judges panel wherein they discussed best practices in intellectual property litigation.  In this article, David discusses current IP licensing issues.

IP licensing luminaries Nimmer and Dodd spoke at length on current IP licensing issues. It was an excellent and enlightening discussion. At first blush, it is not directly litigation related, however, I found the session very valuable for the settlement work that I do, as well as for the IP licesing portion of my practice. So, here are some of the highlights:

• Integration clauses — Be careful to understand what is integrated: Does “Agreement” mean just the legal contract? Does it includes schedules and exhibits? What about subsequent purchase orders or more broadly the non-written agreement that the parties came to which was memorialized by the written agreement? If you mean just the written document, you should say that and define what papers are included. Also, make sure that you integrate any prior agreements as well, if you want them integrated. Watch out because most do not pay much attention to integration clauses.
• Modifications must be in writing — What is meant by “writing” and “signed”? Does email work? Text messages? Some states hold these clauses unenforceable. This is a contract between parties that are free to change their mind (waive), which can be shown by conduct, namely modifying without a writing.
• “Business Partners”, “Affiliates”, and “Subsidiaries” — Each term is crucial, if used. Give thought to how each is defined. 50% voting power is not the best indicia of control, particularly in foreign countries where you may not be able to have 50% power. Do not gloss over “standard” definitions.
• License grant — If your grant uses language that is not closely tied to patent/trademark/copyright law, you have issues as to whether going beyond the scope is a simple contract breach or something more.
  • Pay careful attention to how the license grant covers Subsidiaries to avoid piercing the veil while making sure Subsidiaries can act pursuant to the agreement.
• Most favored nation clauses — “More favorable” does not just refer to economic terms, unless they are drafted as limited to economic terms. The analysis of what is more favorable can be very complex. If you are going to use such a clause, you should spend some time figuring out the scope, what terms are specifically included, what triggers the clause, etc.

Click here for the full Chicago IP Litigation article.

Tags: Dodd, Integration clauses, IP Licensing, Nimmer, Patent Licensing, subsidiaries

This entry was posted on Monday, June 27th, 2011 at 12:35 and is filed under IP LIcensing, Patent Litigation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.