Common pitfalls in IP licensing

Killashee House Hotel, a good location for an episode of the Avengers (the 1960s version)

IP Draughts spent yesterday on a day-trip to Dublin. To be more accurate, he attended a conference at the Killashee House Hotel in Naas, County Kildare, an hour’s drive from the airport.

He was there as an invited speaker at the Knowledge Transfer Ireland (KTI) conference on Licensing Intellectual Property: Strategies and Pitfalls.

By way of background, IP Draughts and his colleagues at Anderson Law have recently completed a writing project for Enterprise Ireland, an Irish Government agency. The fruits of that

Deirdre Kilroy; Ireland’s tropical rainforest can be seen in the background

project can be found on the KTI website. They consist of a large set of template agreements and commentary for use by Irish universities and industry. They form part of a public policy initiative of the Irish Government, set out in a document called Putting Public Research to Work for Ireland. Support on Irish law aspects of the project was provided by Deirdre Kilroy and her team at LK Shields, an Irish law firm.

The materials were commissioned by KTI’s Director, Alison Campbell OBE, PhD, who is well-known in the UK knowledge transfer community. Alison also organised and led the conference.

Alison Campbell doing something funny with Richard Bruton T.D. Ireland’s Minister for Jobs, Enterprise & Innovation

The conference brought together about 160 specialists in technology transfer. It seemed as though most of the Irish KT community was present in the room, as well as representatives from Irish companies, both large and small.

IP Draughts spoke on the subject of common pitfalls in IP licensing. He described, in a suitably anonymised way, some of the problems that he had encountered in licensing deals between universities and industry, and how they might be avoided or resolved. His examples included the following:

1. Wrong type of transaction. Why assigning IP to a company, rather than licensing it, can cause difficulties, particularly if there are ongoing financial obligations such as royalties, and if the IP owner goes into liquidation and sells on the IP to a company that declines to pay the royalty. And why granting exclusive licences to several companies in different fields can cause problems if the fields are too close to one another. KT professionals should apply common sense to field definitions and not rely too heavily on academics telling them that field A is clearly different from field B.
2. Mismatch of expectations. How companies and universities sometimes approach licensing transactions with a completely different set of expectations and assumptions. Companies sometimes assume that a licensing deal involves them “buying” an asset that they will be free to exploit as they see fit, and expect the asset to be “clean”, eg free from IP infringement, and the seller to take some legal responsibility for the asset that they are selling. Whereas a university may assume that it is granting limited rights to a company to enable the fruits of academic research to be put into the public arena, and that it is entirely proper for the university as a public body to avoid all risks and costs associated with the grant of those rights, while at the same time retaining some legal controls to ensure that the IP is commercialised in an appropriate way. How communication of objectives at the outset may reduce the scope for misunderstanding and frustration.
3. Wrong mindset for negotiating deal. How both universities and companies can get reputations for being “difficult” and IP Draughts’ experience of the same concerns being expressed by both industry and universities. The importance of professional negotiations, and the need for training for academics, and perhaps senior management of universities, in how to conduct themselves in negotiations. Not allowing back-channels of communication between the company and academic, and through the academic to the university’s senior management, that undermine the work of the KT professionals. How to steer a middle ground between saying no to everything (which inexperienced negotiators sometimes do) and saying yes to everything (which senior management and academics sometimes press the negotiator to do, through lack of understanding of the issues).
4. Locked into a long-term, loveless relationship. How parties sometimes shun discussion of how they will “divorce” at the time of negotiating their agreement, and why it is important to have a “prenup”. In particular, why it is important to have clear performance and reporting obligations, termination rights for non-performance, a mechanism for resolving disputes over performance, and clear set of obligations on termination.  Also, why it is important to handle “exit” negotiations with a licensee in a professional manner to avoid delays and loss of patent life and secure appropriate compensation for early termination.