1) When are licenses not enforceable a) Unconscionable b) Violates public policy c) Constitutes misuse d) Antitrust violation 2) General Licensing

Provisions a) Parties b) Effective date i) Must be set so we know royalties due, duration, exclusivity, warranty, delivery, return, and damages c) Recitals i) Helpful in determining the parties intent ii) Generally, they are not binding, but can be binding for contextual matters and if it is later referenced in the contract as a covenant d) Definitions i) TIP: do not include a covenant or promise in a definition e) License Grants i) What is being licensed? (1) Pick the IP rights to be used (2) Patent make, use, sell, offer to seel, and import products based on the patnet (3) Copyright reproduce, distribute, publicly perform or display, or make derivatives ii) What are the contours of the license grant? (1) Geographic territories? (distribution) (2) Exclusive or non exclusive? (a) Exclusive means you can t exercise right being licensed and can t license to others (3) Field of use restriction ? (a) Usually rights are limited this way (4) Transferrable? (Personal?) (a) Now there is a presumption of impersonal licensing (b) Personal trademark, trade secret (c) Impersonal software purchases (5) Patent reserve right to use any improvements on the licensed patent subsequently created by licensee iii) Interpretation (1) State law interpret ambiguous language against the drafter (2) Reservation of Rights clause (a) Anything not explicitly stated reserved to the licensor iv) TIP: don t go past the limits of the IP right (time period usually, or geography) f) Delivery and Inspection; acceptance or rejection i) Delivery - Anything that will need to be delivered should be specified ii) Inspection (1) Specify time and inspection specifics (2) OR UCC 2 will be default usually (reasonable under the circumstances)

iii) Acceptance specify or UCC 2 default (1) See p 66 iv) Rejection specify or restatement 2nd default (1) See p 66 (2) UCITA - An immaterial issue will not cancel the entire contract (3) UCC 2 any imperfection can be used for rejection of delivery g) Consideration/payment i) Money royalties (1) Escalating royalties (a) Licenee poorly capitalized and need to retain proceeds at the beginning for ramping up production (b) Gives incentive to licensee to quickly develop and market product (c) Increasing support from the licensor over time (2) De-escalating royalties (a) Licensors contribution to the deal decreases over time (b) Parties expect volume of royalties will increase over time (c) Incentivizes licensee to be successful quickly so it can get past high payments (3) Cap (a) Can cap overall payment or each step in royalty step up (4) Triggers for royalties (a) Licensee s revenue (b) Units of products shipped ii) Cross licensing iii) Other help on the project h) Audits and accounting i) TIP: Be careful not to require your client to audit i) Duration i) Best thing is to explicitly state a termination scheme ii) UCC 2 reasonable time which may be terminated at any time by either paryt upon reasonable notification iii) UCITA special software rule see p. 69 iv) Copyright Act - 203 gives licensors a window of time in which to terminate a license or assignment j) Termination/Cancellation i) Termination most contracts can be terminable at will with reasonable notice ii) Cancelation when a party ends a contract for breach iii) Survival of obligations license will specify some obligations that persist even after cancellation k) Limitation of Liability i) Licenses can limit the liability for breach for damages like consequential or punitive damages ii) For commercial licenses these are almost always allowed iii) For consumers they are often not allowed because there is no bargaining power iv) TIP: leave some sort of remedy in the license, or a court may use all types of liability in valuing the damages l) Warranties i) Warranties are always optional under common law ii) UCC 2 and UCITA express, gap filler, and implied warranties are read into contract iii) TIP: add to best of [licensor s] knowledge

iv) TIP: qualify the warranty with the patent or other prior art known to be in question m) Disclaimer of Warranties i) UCC allows for disclaimer of implied or default rule warranties ii) Sometimes these are not allowed in consumer contracts iii) TIP: you cannot give an express warranty and then take it away iv) TIP: not all states allow for disclaimer of implied warranties n) Indemnity i) Risk allocation by allowing one party to indemnify the other party in the event the first party breaches a warranty ii) Defense obligation - Infringement litigation defense is paid by the licensor o) Choice of Forum p) Choice of Law q) Attorneys Fees i) Optional provision which allows litigation costs for attorney to be counted into damages in suit for breach r) Restriction on Export i) Just to comply with US embargo and other similar laws s) Complete Agreement/Merger/Amendments i) For parole evidence rule t) Severability u) Assignability i) Need to explicitly state that the contact is personal and cannot be assigned v) Notices i) Where to send notices to (addresses) w) Manifesting Assent i) Signature of the parties 3) Patent a) Assignment and Licensing i) An assignment of some claims of a patent is a license b) Exclusive/ non-exclusive i) An exclusive licensee can be given the right to sue third parties ii) An exclusive license may be given power to transfer without authorizations from licensor c) Standing i) A licensee must introduce the licensor as co-plaintiff ii) An exclusive licensee may have the right to sue, and can then bring infringement suit on third party without joining licensor (1) This is when they have substantially all rights in the patent or necessary to prevent absolute failure of justice, aka the patentee is infringing and won t sue himself d) Employment 173 i) If an employee was hired to research and develop a product or process, the employee must assign the patent to the employer ii) If employee is hired in generral scope but covers a field of labor and effort in the performance of which the employee conceived the invention, no assignment is required iii) Employee must grant shop right (royalty free non-exclusive license) when equity demands e) Patent Misuse and Antitrust i) Patent licensing agreement is unenforceable if it violates antitrust or misuse f) Patent exhaustion i) Once product is sold, patentee has no right to restrict its use

ii) Patentee may order restrictions on first seller (like single use) 4) Trade Secret a) What is a trade secret i) Elements under UTSA (1) Formula, pattern, (2) Derives economic value from not being generally known or ascertainable (3) Subject to efforts reasonable to maintain its secrecy ii) Other things (1) Indefinite time period (2) Lost if secret is let out (3) Reverse engineering allowed b) Assignment v. license i) An assignment will grant right to prevent unauthorized disclosure and the right to prevent further use of the trade secret by all others c) Exclusive v. non-exclusive i) Licensor must reserve rights, or he will not have any property rights in it ii) You don t want too many licensees out there b/c the secret runs risk of being disclosed d) Nondisclosure and confidentiality agreements (NDA s) i) Kinds of NDA s (1) Mutual agreements (2) One way agreements ii) What is in an NDA (1) Definition of the confidential information (2) Exclusions from confidential information (public domain information) (3) Obligations and duties of receiving parties or dual obligations in the case of mutual agreements (4) Duration of the access to and use of the trade secret e) Good to get non compete agreements for your employees if they are exposed to trade secrets i) Remember that restrictions must be reasonable ii) General skill and knowledge acquired during work will not be restricted f) Litigation issues i) Breach of NDA means licensor can sue for trade secret misappropriation ii) Exclusive licensee can sue for misappropriation iii) Defenses obtained by proper means 5) Copyright a) Assignment v. license i) Ownership of property right may be transferred in whole or in part 204 (assignment) b) Works made for hire see software licensing c) TIP: work in new mediums of expression into license d) Statutory termination - 203 i) An individual author, a license may be terminated ii) Five year period after 35 years after date of grant iii) Notice to terminate 2 to 10 years prior to effective termination date e) Compulsory licenses i) Musical compositions can be licensed without the consent of the copyright holder f) Misuse, antitrust i) Can t do anything contrary to public policy g) Litigation issues

Standing to sue for infringement to the legal or beneficial owner of an exclusive right under a copyright - 501(b) 6) Trademark a) Assignment i) Remember tax ramifications ii) All good will is transferred with the trademark b) License c) Assignment and license back i) Many agreements have assignment to the assignee and then a license back to the assignor for a certain territory or d) Exclusive and non-exclusive i) Usually if a license is exclusive, it is only for a limited field of use ii) An exclusive licensee can even stop the licensor from using the mark iii) Non-exclusive license is generally non-transferrable to third party without consent of licensor iv) TIP: make sure to include non-transferrable in license terms e) Quality control i) Licensor s affirmative duty take reasonable measures to detect and prevent misleading use of its trademark by licensees ii) TIP: don t make this examination mandatory for your client f) Standing i) Exclusive licensee can usually bring a suit against a third party for trademark infringemtn (1) But this depends on how much control they have look to factors like quality control provisions and control in other territories by the licensor g) Licensee estoppels i) Licensee cannot contest the validity of licensor s tm during the term of the license ii) Licensee cannot prove abandonment of tm by licensor during the term of the license from the actions of the licensor h) International Issues i) Counterfeit goods counterfeit tm s on products ii) Grey market goods from different territory 7) Right to Publicity a) What is the right? i) property right to an identity ii) State common law or statute iii) Defined: the right of every person to prevent the unauthorized commercial use of his or her identity b) Mergers with other IP i) Can be a tm when identity is connected with a product ii) Can be copyright if a character is connected with a real person s identity c) Assignment and Licensing i) A license is almost always used ii) Things to keep in mind: (1) Who owns the right of publicity (2) What is the scope fo the right of publicity license names, likeness, and/or image? (3) How specific does the license grant have to be, especially considering other IP? (4) Who seeks the icense of the right of publicity (5) What bundle of rights is available under common/statutory law?

i)

(6) When does the license commence? (7) What is the duration of the license? (8) Under what circumstances can the license be terminated? (9) Will the right of publicity be sublicensed? (10)For what purpose is the license sought? (11)What payments will be received? (12)How will payments be received (13)Are there fair uses of the persona or identy? (14)When is a waiver or release used? (15)What are the quality control requirements? iii) Standing (1) Exclusive licensee has standing to sue third party for misappropriation iv) Defenses (1) Consent by holder of right (2) First sale/exhaustion doctrine (3) Preemption (4) First amendment freedom of speech news stories 8) Consulting agreement 9) NDA s Non Disclosure Agreements p 221 has 2 examples a) Kinds of NDA s i) Mutual agreements ii) One way agreements b) What is in an NDA i) Definition of the confidential information ii) Exclusions from confidential information (public domain information) iii) Obligations and duties of receiving parties or dual obligations in the case of mutual agreements iv) Duration of the access to and use of the trade secret 10) Software licenses a) Forms of software i) Source code readable by humans ii) Object code machine code b) Types of licenses i) Upstream licenses (1) License to build product (2) License to create solutions (3) Source code licenses (a) GPL (i) If a licensee creates a derivative and distributes it, then the licensee must provide the source code and full rights to do anything with it to all parties (b) BSD (i) Grants licensee the right to do anything with the source code, including creating derivatives that are held as trade secret. ii) Downstream licenses (1) License to distribute software (a) Distribution licenses allow third parties to distribute licensor s software (2) License that describe usage (a) EULA end user license agreement

(i) Used for price points businesses, home, educational use c) Who owns the rights? i) Work for hire OR employee within the scope of employment (1) Determine under agency law whether work was by employee or independent contractor (2) Factors to consider for IC or employee: (a) Skill required (b) Source of instrumentalities and tools (c) Location of the work (d) Duration fo the relationship between the parties (e) Can hiring party assign additional projects to the hired party (f) Discretion of hired party over when and how long to work (g) Method of payment (h) Hired party s role in hiring tand paying assistants (i) Whether the work is part of the regular business of the hiring party (j) Whether the hiring party is in business (k) Provision of employee benefits (l) Tax treatment of the hired party ii)