LES Australia and New Zealand 20th Annual Conference 19 March 1994
Crispin Marsh, F.B. Rice & Co
John Terry, Griffith Hack & Co
|
|
|
|
|
|
|
|
The following clauses are drawn from the WIPO publication "Licensing Guide for Developing Countries" and reflect to some extent a reaction to the fear of technological imperialism. It will be noticeable that the licensing back provision for licensee improvements require payment by the licensor.
"Improvement" means any technological advance which is not reflected in an invention or industrial design that is the subject of the Patent(s) but which is patentable or is the subject of a patent granted or of an application for the grant of a patent and which would, if exploited, [reduce the cost of the manufacture of the Product [by at least (specified) percent]] [increase the sales of the Product [by at least (specified) percent]] [reduce the cost of the application of the Process [by at least (specified) percent]] [increase the output of the application of the Process [by at least (specified) percent]].
"Development" means any technological advance which is related to the Product or the Process and which is not an Improvement that is the subject of a patent or of an application for the grant of a patent, as well as any technological advance which is not reflected in the Technical Information.
(a) Each Party shall promptly inform the other of any Improvements and Developments which it may own, possess or control or be aware of and provide all available details thereof sufficient to enable the recipient Party to use and practice the same.
(b) Any Party notifying the other of any matter in paragraph (a) above may at the time designate the same as potentially patentable, whereupon the recipient Party shall keep the same confidential and do all such things as will ensure that letters patent applied for shall not be void for prior publication, prior use or otherwise. [Should the notifying Party desire that any such patentable matter shall not be patented, he shall have the right to veto any application for the grant of a patent on such patentable matter and the recipient Party shall respect such veto.]
(a) The Licensor shall furnish to the Licensee, [without any delay and free of charge,] as soon as [laboratory tests are completed and before the Licensor applies for the grant of a patent], [the application for the patent is published] [their industrial application is commercially realisable], all information on Improvements or Developments made or acquired by the Licensor [during the term of this Agreement] [during a period of (stated) years].
(b) As the Licensor may have the right to apply for the grant of patents on such Improvements the Licensor agrees to make reasonable efforts to obtain such protection in the Exclusive and Non-Exclusive Territories.
(c) In the event the Licensor elects, with respect to such Improvements, not to apply for a patent or patents in the said Territories, the Licensee shall have the right, with the prior consent of the Licensor in writing to apply for a patent or patents in the Licensor's or Licensee's own name and at the Licensee's own expense.
(d) It is agreed that during the term of this Agreement the Licensee shall have the right to use such patent or patents and free of charge in the Exclusive Territory and non-exclusively, but subject to payment, in the Non-Exclusive Territories.
It is understood and agreed that insofar as the Licensor may hereafter own, or may hereafter acquire license rights under letters patent with claims covering the Product, and as to which rights the Licensor has the right to grant sub-licences, the Licensor shall extend to the Licensee the same rights under such patents in respect of manufacture, use or sale of the Product, insofar as the Licensee may desire and request such license or sub-license, and insofar as the Licensor is able to do so, as are extended to the Licensee under this License in respect of the Patents.
(a) The Licensee agrees to inform the Licensor of the fact of, and, subject to payment, to furnish to the Licensor, as soon as [laboratory tests are completed and before the Licensee applies for the grant of a patent] [the application for the patent is published] [their industrial application is commercially realisable], all information on Improvements and Developments made or acquired by the Licensee [during the term of this Agreement] [for a period of (stated) years].
(b) As the Licensee may have the right to apply for the grant of patents on Improvements, the Licensee agrees to make reasonable efforts to obtain such protection in the Exclusive and Non-Exclusive Territory.
(c) In the event the Licensee elects, with respect to such Improvements not to apply for a patent or patents in the said Territories the Licensor shall have the right, with the prior consent of the Licensee in writing, to apply for a patent or patents in the Licensor's or the Licensee's own name and at the Licensor's own expense.
(d) It is agreed that during the term of this Agreement the Licensor shall have the right to use such patent or patents non-exclusively, subject to payment to be agreed upon, in the non-exclusive Territories but shall not have the right to use such patent or patents issued or registered in the Exclusive Territory.
This precedent represents a relatively "old fashioned" clause requiring the Licensee to effectively grant back improvements to the Licensor. This clause may have anti-trust implications in a number of countries. The clause also has the problem of not discussing the Licensee's right to file patent applications for its own improvements in those cases where the Licensor does not exercise its right to file.
Licensee shall be entitled to the use or employment, subject to all the terms and provisions of this Agreement, of any and all improvements in Know-How (subject to Patent Rights of Licensor) which Licensor shall make during the term of this Agreement.
If Licensee shall at any time or times during the term hereof, make or discover any and all improvements in Know-How, then, whether or not such improvements shall be patentable, Licensee shall without delay communicate and explain the same to Licensor, and Licensor shall be entitled to use and license the same without any payment to Licensee in respect thereof. In every such case, Licensor shall have the right, if it desires so, to apply to the appropriate authorities of any government in the world for patents in its own name and at its own cost, and shall grant Licensee a licence for such patents in Territory and Exporting Territory in accordance with the terms and provisions of this Agreement.
This precedent provides for a mutual exchange of improvements but leaves open to some extent the questions of the filing of patent applications in respect of the Licensee's improvements. An interesting aspect of this precedent is that there is provision for declining royalties over 3 years following termination. This is intended to overcome a possible reluctance on the part of the Licensor to provide improvements to the Licensee towards the end of the term of the Licence.
The Licensor hereby agrees that if during the term of this Agreement the Licensor shall own or control any modifications, changes, improvements, inventions, KNOW-HOW, PATENTS or TRADEMARKS in the TERRITORY which the Licensor has a right to license and which are of use in the design, manufacture, sale and/or operation of PRODUCTS, the Licensor shall disclose same to the Licensee; and such shall be included under the terms of this Agreement.
The Licensee shall not apply for or acquire any rights in any invention which is communicated to the Licensee by the Licensor under this Agreement or which results from any such communication, other than as provided for in this Agreement.
The Licensee shall promptly notify the Licensor of the details to any and all modifications, changes or improvements in and to said PRODUCTS or any products similar thereto, and in and to the manufacture, use, and sale thereof, either conceived, developed, or acquired by the Licensee or any employee or agent of the Licensee's during the term of this Agreement or for one (1) year thereafter; and the Licensee hereby grants to the Licensor a royalty-free, non-exclusive right and license thereto throughout the world with right to sub-license. To the above end warrants that all employees involved with PRODUCTS hereunder will be under written obligation commensurate with the above.
The Licensor agrees that in the event of expiration of this Agreement, or termination thereof for any reason, that the Licensee shall have the non-exclusive right to use any and all KNOW-HOW in the Licensee's possession on the date of such termination or expiration, and the non-exclusive right to continue to make, use or otherwise dispose of said PRODUCTS, and the Licensee agrees:
(a) to pay the Licensor a ROYALTY on the NET INVOICE PRICE of all PRODUCTS (including spare parts and replacement parts) used, leased, sold, or otherwise disposed of by the Licensee hereunder as follows:-
(1) percent of said NET INVOICE PRICE for such PRODUCTS during the first twelve (12) months following said date of termination or expiration;
(2) percent of said NET INVOICE PRICE for such PRODUCTS during the second twelve (12) months following said date of termination or expiration; and
(3) percent of said NET INVOICE PRICE for such PRODUCTS during the third twelve (12) months following said date of termination or expiration; and
(b) that the Licensee's rights above do not constitute an agreement, express or implied, to use any PATENT, PATENT APPLICATION or TRADEMARK and accordingly, the Licensee will cease to do so.
This precedent represents what may be close to an "International Norm" for an improvement clause by a Licence between parties of substantially equal strength and having substantially equal likelihood of producing improvements. In this case the recitals set the scene for a "club" involving a number of Licensees around the world and the Improvements Clause is intended to give effect to the concept outlined in the recitals. In the clause given each Licensee has a non-exclusive manufacturing territory and a non-exclusive sales territory. This type of clause is easier to sell to a prospective Licensee if the manufacturing right, at least, is
WHEREAS Licensor possesses or has access to and rights in valuable technical, manufacturing and other information relating to the design, manufacture, assembly, use and sale of Licensed Product (as hereinafter defined),
AND WHEREAS Licensor has in operation an active licensing programme to license the said information to selected manufacturers in various countries around the world in consideration for a royalty and other monetary consideration together with access to information and Patents relating to Licensed Product generated by these licensees.
AND WHEREAS Licensee desires to participate in the said licensing programme and thereby continuously obtain all the said information and patent rights owned by Licensor or to which Licensor has access under Licensor's licensing programme including the information and patent rights to which Licensor is entitled by virtue of its Licence and Technical Assistance Agreements with its licensees.
AND WHEREAS Licensor is willing to continuously license Licensee as hereinafter set forth to manufacture, assemble, use and sell the Licensed Products and components and/or parts thereof under any patents and technical information owned or controlled and/or to be owned or controlled by Licensor or to which it has access or will have access or under which it has the right to grant licences and to continuously render certain services to Licensee all upon the terms and conditions of this Agreement;
3.1 Subject to the reservations and exclusions hereinafter mentioned, Licensor insofar as it lawfully may, hereby grants to Licensee under any and all patents and patent rights in the Territory applicable to the Licensed Product owned or controlled from time to time by Licensor, which patents and patent rights include those listed in Schedule I hereof, or under which it may have from time to time the right to grant licences and under the Information from time to time furnished or available to Licensee pursuant to this Agreement, (1) a non-exclusive licence to design, manufacture, have manufactured, assemble, use and sell the Licensed Product and parts therefore in the Territory and (2) a non-exclusive licence to use and sell the Licensed Product elsewhere in the world when such Licensed Product is sold as a total entity together with the right to sell replacement parts for Licensed Product so sold elsewhere in the world by Licensee; and (3) permit use of Licensed Product by Licensee's customers therefor in the Territory and elsewhere; except where such rights to use, sell and permit the use of Licensed Products may be prohibited by letters patent issued by countries other than those included within the Territory, the rights to which are not granted to Licensee herein.
3.2 In the event that Licensor receives Information relating to Licensed Product or receives a licence in respect of know-how or patented technology relating to Licensed Product from a third party which is itself a Licensee of Licensor in respect of Licensed Product Licensor will insofar as it is able make that information available to Licensee and grant to Licensee a licence in respect of the know-how or patented technology as the case may be. The terms of this agreement will apply utatis mutandis to any such licence. Attached hereto and marked Schedule II is a list of parties who are at the date of this agreement licensees of Licensor in respect of Licensed Product and the Information relating thereto.
7.1 Each party shall communicate to the other details of any know-how or patentable invention relating to Licensed Products or any improvement or modification thereof developed during the life of this Agreement.
7.2 Subject to the reservations and exclusions hereinafter mentioned, Licensor grants to Licensee the non-exclusive licence, as described in Paragraph 3.1 (1), with respect to such know-how and patentable technology as is developed by Licensor or to which Licensor has rights and access, under the terms of this Agreement, and the non-exclusive licence, as described in Paragraph 3.1(2), with respect to such know-how and patentable technology.
7.3 Licensee grants to Licensor a non-exclusive royalty free licence to use such know-how and patentable technology as is developed during the life of this Agreement by Licensee for use during the life of this Agreement and twenty (20) years thereafter in all countries of the world except where such right may be prohibited by letters patent issued to Licensee in the Territory; any rights under such patents are not granted or ceded hereby. Licensor shall have the right to grant sub-licences in respect of any know-how or patentable technology so licensed to it by Licensee, in all countries of the world except where such rights may be prohibited by letters patent issued to Licensee in the Territory for such technology; and rights under such patents are not granted or ceded hereby.
7.4 Nothing in this agreement shall obligate either party to apply for or take out, maintain or acquire any patents in any country. When either party communicates a patentable invention to the other it shall advise whether it elects to file a patent application or applications in respect of the invention and in what country or countries.
7.5 If a patentable invention is communicated to Licensee by Licensor and Licensor elects not to file a patent application in the Territory Licensee may do so in its own name and at its own expense but must re-assign the application or any patents granted on the application to Licensor or to a nominee of Licensor on termination of this agreement, provided, however, that Licensee shall be granted and retain a non-exclusive royalty-free licence under such patents for the life of the patents.
7.6 If a patentable invention is communicated to Licensor by Licensee Licensor shall have the right to file patent applications in its own name or in the name of a nominee at its own expense in any country or countries outside the Territory in which Licensee does not elect to file such an application. If Licensor files such a patent application or patent applications it shall grant to Licensee (or if it files in the name of a nominee, procure for Licensee), a non-exclusive royalty free licence for the life of the patent or patents resulting from the application or applications.
This precedent is a development of the preceding precedent but deals differently with the four separate classes of improvement. In this case the Licensor was a small, one product company and the Licensee a large multi-national company. As a matter of interest all of the improvements were, in fact, either Licensor or Consultant Improvement Inventions!
a "Licensor Improvement Invention" shall mean a technical development or invention whether patentable or unpatentable which relates to the design, manufacture, transport or installation of Products and associated components and which was made by Licensor or a director, employee or agent of Licensor without the use of any resources of Licensee;
a "CONSULTANT Improvement Invention" shall mean a technical development or invention whether patentable or unpatentable which relates to the design, manufacture, transport or installation of Products and associated components and which was made solely by JOE BLOGGS, a Director of Licensor, in the course of his employment as a consultant by Licensee;
a "JOINT Improvement Invention" shall mean a technical development or invention whether patentable or unpatentable which relates to the design manufacture transport or installation of Products and associated components and which was made in part by Licensee and in part by JOE BLOGGS, a Director of Licensor, in the course of his employment as a consultant by Licensee;
a "Licensee Improvement Invention" shall mean a technical development or invention whether patentable or unpatentable which relates to the design, manufacture, transport or installation of Products and associated components and which was made by Licensee solely;
9.1 Each of the parties hereto shall communicate to the other forthwith on becoming possessed thereof from time to time during the life of this Agreement a full description of any Licensor Improvement Invention or CONSULTANT Improvement Invention and the recipient shall be entitled to use the same including the right to grant sub-licences in respect thereof.
9.2 Where information within the terms of 9.1 is obtained or obtainable from another only on payment there shall be no obligation to communicate such information except against reimbursement and there shall be no obligation to receive such information and make reimbursement.
9.3 Each of the parties hereto shall communicate to the other forthwith on becoming possessed thereof from time to time during the life of this Agreement a full description of any JOINT Improvement Invention.
9.4 It is hereby agreed between the parties that Licensor Improvement Inventions and CONSULTANT Improvement Inventions shall be the property of Licensor and that JOINT Improvement Inventions and Licensee Improvement Inventions shall be the property of Licensee. Each party shall execute such documents as are necessary to enable the appropriate owner of the Improvement Inventions to obtain such patent or other industrial property rights as are obtainable in respect thereof.
9.5 Where any such Licensor Improvement Invention or CONSULTANT Improvement Invention or JOINT Improvement Invention has been devised and is the property of one party, and such party notifies the other party that it does not intend to make application for Letters Patent in any or some (specifying which) countries of the World, the other party shall have the right to apply for Letters Patent in respect thereof (in the countries where such party has not applied) in its own name to the intent that Letters Patent thereon shall issue in the name of such other party, and the party so disclosing shall execute all documents, forms and declarations and do all such things as shall be necessary vest the same in such other party.
9.6 Licensor hereby agrees to grant to Licensee under any Letters Patent granted to Licensor in respect of Licensor Improvement Invention or CONSULTANT Improvement Invention the like licence as is agreed to be granted herein under the Licensed Patents (at no additional royalty) and such patents for Improvement Invention shall be included within the expression "Licensed Patents".
9.7 in respect of any Letters Patent outside the Territory granted to the Licensee in respect of JOINT Improvement Inventions Licensee shall negotiate in good faith with Licensor to grant to Licensor the right to grant sub-licences to third parties to make, use, exercise and vend the subject matter of the JOINT Improvement Invention outside the Territory.
9.8 On termination of this Agreement under the provisions of Clause 12 hereof or if this licence is rendered non-exclusive under the provisions of Clause 5.6 hereof Licensor shall have an irrevocable non-exclusive royalty free licence, including the right to grant sub-licences to make, use, exercise and vend Products anywhere in the World. This clause shall apply to any JOINT Improvement Invention conceived during the term of this Agreement insofar as they apply to the manufacture, use or sale of Products.
9.9 Licensor shall have no right or licence to make, use, exercise or vend anywhere in the World, Licensee Improvement Inventions or Products which incorporate or make use of Licensee Improvement Inventions if, however, Licensee fails to complete the payment of the full disclosure fee provided in clause 5.1(a) hereof or if this Agreement is rendered non-exclusive under the provisions of Clause 5.6 hereof then Licensor shall have a royalty free non-exclusive licence to make use, sell and sub-licence such of the Licensee Improvement Inventions conceived prior to this licence being rendered non-exclusive under the provisions of Clause 5.6 hereof or prior to the Agreement being terminated under the provisions of Clause 12 hereof as it is aware of for the manufacture, use or sale of Products.
This is a precedent drafted in a very "European" style. It is interesting in that the clause only relates to "non-patented Improvements". The definitions of this term leaves open the status of patent applications.
1.2 "Non-Patented Improvements" means any improvement to or modification of any of the Products from time to time included within this Agreement such improvement or modification not being the subject of patent or other similar intellectual property protection and which in order to be used involves the practice of a patent or Know-How of the licensor utilised in the manufacture of use of the Products aforesaid.
10.1 In respect of any Non-Patented Improvement made, acquired or otherwise discovered by the Licensor during the continuance of this Agreement, then the Licensor, to the extent it is not prevented from so doing by agreement with a third party, by law or government regulation, or by virtue of the terms on which it acquires or develops the same, shall promptly communicate and make available to the Licensee such Non-Patented Improvement and shall authorise and license Licensee to use the same as if it formed part of this Agreement. No royalty shall be payable in addition to that payable on the Product to which such Non-patented Improvement relates.
10.2 The Licensee shall, to the extent it is not prevented from so doing by agreement with a third party entered into prior to the date hereof, by law of government regulation, or by virtue of the terms on which it acquires or develops the same, promptly communicate and make available to the Licensor any Non-Patented Improvement which Licensee may from time to time make, acquire or otherwise discover during the continuance of this Agreement and shall authorise and license Licensor to use the same. Such rights and licences shall be non-exclusive and royalty free and extend to all countries outside the Territory.
This precedent forms part of an Agreement between an eminent medical specialist and a multi-national company holding a world wide exclusive licence. In these circumstances, no attempt was made to obtain for the Licensor any rights to Licensee's improvement. The Licensor was mainly concerned to see that his reputation would not be deleteriously affected by changes made to the product by the Licensee without his approval.
17. Modifications, Additions and Improvements
17.1 The design of the Product shall not be amended by the Licensee or any Sub-Licensee from the Licensee without the prior approval of the Licensor, which approval shall not be unreasonably withheld.
17.2 During the continuance of this Licence, the Licensor shall communicate to the Licensee his suggestions for any modifications, additional improvements to the Products (whether or not patentable), including manufacturing specifications as to the manner of effecting such improvements. The Licensee shall be entitled, but not required, to incorporate such modifications, additions or improvements in the Products it sells pursuant to this Agreement, without payment of any other royalty or compensation than that herein before provided.
17.3 Any modifications, additions or improvements to the Products made by the Licensee with the Licensor's consent during the term of this Licence may be used by the Licensee in the manufacture of the Product during the continuance of this Agreement without payment of additional royalties to the Licensor.