L59 Licensing Checklist
It is perhaps dangerous to offer a checklist which runs the risk of being assumed to fit all situations and cover all eventualities. Realistically no list can hope to do so.
With that warning the following list is offered as a reminder of some of the issues to consider when contemplating negotiating a licensing agreement.
This list is primarily concerned with a two party simple manufacturing patent and know how licence and not with cross-licences, pools or collaborative R&D projects even if many of the issues may also be relevant to such agreements.
The list is also available as a Microsoft Word document or as an Adobe Acrobat .pdf file
1. Identification of parties
2. Background
3. Definition of terms
3.1 Territory licensed
3.2 Products
3.3 Processes
3.4 Patents
3.5 Know How
3.6 Definition of Sales
3.7 Definition of fields
4. Licence Grant
4.1 Overall Diligence
4.1.1 Best endeavours
4.1.2 Minimum acceptable standards / performance
4.1.3 Consequences of failure to meet standards
4.1.4 Reporting requirements
4.2 Patents
4.2.1 Exclusive / sole / Non-exclusive
4.2.2.Rights conferred - manufacture / market / etc.
4.2.3 Licensed territory - exclusive / non-exclusive
4.2.4 Minimum acceptable standards / performance
4.2.5 Consequences of failure to meet standards
4.2.6 Licensor rights to supply market on failure to meet stds.
4.2.7 Provisions regarding TradeMarks
4.2.8 Warranties regarding patents
4.2.9 Maintenance of patents, payment of renewal fees
4.2.10 Infringement by third parties - division of responsibility / costs
4.2.11 Infringement of third parties' - division of responsibility / costs
4.2.12 Most favoured licensee provision?
4.2.13 Rights to sub licence
4.2.14 Marking
4.2.15 Provisions if patent found invalid - distinction of know how.
5. Know How
5.1 Details of documentation
5.2 Cost of documents
5.3 Confidentiality
5.4 Permitted use of confidential information
6. Show How
7. Manufacture and Marketing
7.1 Specifications
7.2 Provision of machinery / cost
7.3 Provision of materials
7.4 Quality
7.5 Packaging
7.6 Marketing efforts
7.7 Trade mark use
8. Royalty rates / Payment
8.1 Up front fees
8.1.1 Materials, consultancy, training etc.
8.1.2 Initial Lump sum payment
8.1.3 Lump sum
8.2 Provisions re Options
8.2.1 Conditions for exercise
8.2.2 Exercise price - investment required
8.2.3 Timescale and milestones
8.2.4 What happens if not exercised
8.3 Royalties
8.3.1 Base payments
8.3.2 method of calculating royalty
8.3.3 non returnable if invalid
8.3.4 Variation of rates in certain cases
8.3.5 TAX considerations
8.3.6 Minimum royalties
8.3.7 Advances / delayed payment schedules
8.3.8 Consequences of delayed / non/payment
8.3.9 Sublicence provisions
8.3.10 Reporting requirements
8.3.11 Auditing
8.3.12 Method and Currency of payment
8.3.13 Separation of payments for patents, knowhow & tax consideration.
9. Improvements
9.1 Defined
9.2 Reciprocal
9.3 Conditions in case of joint inventorship
9.4 Disclosure conditions
9.5 Royalties or not
9.6 Sub licences or not
9.7 Responsibility for filing applications etc.
10. Confidentiality
10.1 Duration
10.2 What is covered
10.3 What happens at end of agreement
10.4 No disclosure without approval
10.5 Conditions regarding storage of Confidential Information
10.6 Exceptions (if in public domain, otherwise published, etc)
11. Indemnification
12. Termination
12.1 Expiry,
12.2 Termination by agreement
12.3 Renewal
12.4 Termination before end of term
12.5 Breach of conditions
12.6 Attack on validity by licensee
12.7 Bankruptcy
12.8 Acquisition/Merger
12.9 Post termination provisions
12.10 Surplus stock
12.11 Confidential documentation
12.12 Outstanding fees
12.13 Surviving provisions
13. Miscellaneous
13.1 Governing Law
13.2 Arbitration
13.3 Assignability / Succession (see also termination & sub-licences)
13.4 Severability
13.5 No agency, partnership or joint venture
13.6 Force Majeure
13.7 Formal notices
13.8 Registration of the agreement
13.9 Signatures
14. Supplementary Schedules
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