Do you need an option or license for your startup? Use this information to decide which option to follow. Licensee (close) A party that acquires rights under a license agreement. The bargaining power of both parties to a licensing agreement often depends on the type of product. For example, a film studio that licenses the likeness of a popular superhero to an action figure creator could have significant bargaining power in this negotiation, as the manufacturer is likely to benefit enormously from such an agreement. The film studio therefore has the leverage to take its business elsewhere if the manufacturer is cold on its feet. A pipeline agreement is essentially a sophisticated form of option agreement, the purpose of which is to determine the rights that the spin-off has over the future intellectual property generated in the founder`s department. Under such an agreement, the option beneficiary (the spin-off company) receives a « pipeline » that allows it to obtain intellectual property rights from the original university department. Definitions. It may or may not be a separate clause in the agreement. Definitions are often found throughout the document; The standard method for providing definitions is to follow a definition with its term, with initial letters and in parentheses. Thereafter, throughout the agreement, the term « effective date » will be used instead of the actual date. When a separate clause is used for definitions, the convention is usually to enclose the defined term in quotation marks. For example: Sometimes the terms option and right of first refusal are used vaguely and interchangeably to refer to any type of right of opportunity.
(Examples of options, pre-emptive rights and similar provisions can be found in Box 4 at the end of this chapter.) Pipeline agreements generally grant the possibility of obtaining an assignment or license of intellectual property. A pipeline agreement typically includes a definition of « pipeline IP » that is used to define and limit the intellectual property that should pass through the pipeline. Usually, a university wants to limit the pipeline flow to the intellectual property generated by the founders or their lab for a set period of time. The University may wish to exclude from the definition any intellectual property that is subject to obligations to third parties, e.B. obligations to sponsors or those over which a third party has rights (e.B. joint inventions made with scientists from other universities). The method by which the new IP is properly identified as pipeline IP needs to be defined in detail, i.e. provisions should be made for the university/founders to report regularly on their relevant research to the spin-off company so that the spin-off can then exercise its options. Assuming that there are not several potential licensees competing for a technology, INVO is basically willing to grant the licensee an exclusive option for 6 months free of charge and term extensions are possible.
The Company has the right to exercise the option if the agreed conditions are met, which may include raising a certain amount of capital, seeking a CEO and carrying out a business plan. Universities can therefore object to the granting of pre-emption rights that apply immediately before signing an agreement with a third party. If it is economically necessary to grant a right of first refusal, the authors have found a solution to formulate the right of first refusal in such a way that it works immediately before signing a non-binding condition sheet with the third party. The third is less likely to complain if they are overwhelmed at this stage. A good example of the American model is the Massachusetts Institute of Technology (M.I.T.). In most cases where M.I.T. research agreements involve a single sponsor, sponsors accept M.I.T.`s standard ip clause, which offers the sponsor a number of options (including an option for an exclusive license) regarding the licensing of patents and copyrighted material, including software. In situations where a promoter wishes to negotiate certain « non-standard » intellectual property conditions, M.I.T. is willing to enter into further negotiations. If an M.I.T. research agreement includes a consortium, standard licensing options are limited to non-exclusive licenses.5 Meaning of the rights that would be subject to the option: Negotiation. Decide who is responsible for negotiating the terms of the option.
Does this person have the required level of education and qualification? Establish a procedure for referring difficult questions to a more specialized consultant (p.B an in-house lawyer). Do the parties want to have a specific date from which the agreement takes effect? If so, agree and set an « effective date » or « start date » to use as the starting point for any option period. It is a bad practice to try to backdate an agreement by entering a previous date in the signature block. Among the terms often negotiated in option agreements are the following: Many universities enter into a large number of chili contracts, including options, with many different organizations. It can be difficult to know whether, if the university wants to talk to a third party, there is already an option between them and, if so, whether it is in force and whether it covers the type of discussions envisaged. Maintaining a database for general contracts (or better yet, a discrete database only for options), which contains brief details about the terms of each option and searchable fields, can be invaluable. Another scenario in which a spin-off company may not be the « licensee of choice » is that the university may decide to grant non-exclusive licenses – for example, if several companies are potential infringers of the relevant intellectual property of the university and may be interested in acquiring a license. Although the detailed terms of option contracts vary, they often contain provisions that cover the following: License (close) Granting of permission to use an intellectual property right within a defined time frame, context, market line or territory. There are important differences between exclusive and non-exclusive licenses. An exclusive license is « exclusive » in terms of defined scope, meaning that the license may not be the only license granted for a particular ip asset, as there may be many possible areas and areas of use that may also be subject to an exclusive license. By granting an exclusive license, Licensor agrees not to grant any further licenses of the same rights within the same scope or scope covered by the Exclusive License.
The owner of the intellectual property rights may also grant any number of non-exclusive licenses that cover rights within a defined scope. A patent license is a transfer of rights that does not constitute an assignment of the patent. A trademark or service mark may be effectively licensed only if licensor controls the nature and quality of the goods or services sold by licensee under the licensed trademark. Under copyright law, an exclusive licensee is the owner of a particular copyright and can take legal action for infringement of the licensed right. There is never more than one copyright in a work, regardless of the owner`s exclusive license to various rights in different people. Since a pipeline agreement includes different parts of the (as yet unidentified) intellectual property and also serves to determine the future relationship between the spin-off and the university (and/or the university`s technology transfer office), the pipeline agreement is necessarily a more complex type of agreement than a simple option. .
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