Category Archives: Licensing

Potential UN convention on IP licensing

In 2 weeks’ time, IP Draughts will be going to Geneva. The University of Geneva has invited him to give a presentation on IP licensing, as part of an all-day conference on technology transactions, which is jointly sponsored by the university and by LES Switzerland.

Since accepting the invitation, he has learnt that the morning séance is being conducted in English, and the afternoon in French. Thankfully, IP Draughts has been allocated to the morning session. His GCSE French (grade A) is not really up to debating implied terms in licensing transactions. Froggy Hunter (his French teacher; were nicknames ever politically correct?) could have provided language training on this subject, but for some reason it didn’t seem to be a priority in the 1970s classroom. There was more of a focus on not pronouncing faim as femme.

IP Draughts’ talk will propose that the United Nations should develop an international convention on IP licensing, perhaps drawing on some of the approach taken in its existing convention on the international sale of goods. The talk will draw attention to some of the problems with international IP licensing, including:

  • different legal systems approaching the interpretation of licence agreements in different ways, with some countries having limited experience of the subject.
  • different approaches to negotiation and the preparation of agreements in different countries.
  • the use of template agreements of varying drafting quality.

The talk will cite the example of the English High Court case of Unwired Planet v Huawei, where the court scrutinised the terms of a licence agreement between a US company and a Chinese company.
Finally, the talk will mention some areas that the convention might cover, including general principles of interpretation, implied terms, and perhaps even a model agreement.

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When is an exclusive licence not an exclusive licence?

In IP Draughts’ experience, clients sometimes query the use of the term “exclusive” in licence agreements. Different questions arise. Below are some of them, and IP Draughts’ short-form answers (good enough for a rough guide, but more work is required when considering the quesiton in an individual case).

What does “exclusive” typically mean in a licence agreement?

  • Does it mean that the licensor is not allowed to exploit the IP within the scope of the licence? Yes.
  • Does this need to be stated explicitly (eg through the use of a phrase such as “even as to the licensor”)? No, though IP Draughts would sometimes define exclusive, particularly if the parties have a different view of the world, or there is an EU element (see below).
  • Can you divide up the fields in which the IP is to be commercialised, and grant exclusive licences in separate fields under the same IP? Yes
  • If a licensee sells a licensed product for use in its field, but the purchaser (or a purchaser from that purchaser) uses it outside the field, can they be prevented from doing so and is the licensee in breach of their licence? Difficult legal issues, but often no.
  • Can you grant exclusive licences in different territories under essentially the same IP? Yes.
  • Does this mean that the licensor guarantees that no-one else (eg another licensee) will exploit in the licensed territory? No, particularly in the EU where passive sales by other licensees are allowed.
  • Does this mean that the licensee promises not to sell outside its licensed territory? No, particularly in the EU where passive sales outside the territory are allowed.

Meaning of exclusive in the (UK) Patents Act 1977 (“PA”)

Under the PA, an exclusive licensee has the right to bring proceedings against infringers in its own name. Exclusive licensee is defined in the PA, but only for the purposes of clarifying who has the statutory rights of an exclusive licensee – there is no general assumption that this definition is relevant when interpreting licence agreements. Section 130 of the PA provides:

‘exclusive licence’ means a licence from the proprietor of or applicant for a patent conferring on the licensee, or on him and persons authorised by him, to the exclusion of all other persons (including the proprietor or applicant), any right in respect of the invention to which the patent or application relates, and ‘exclusive licensee’ and ‘non-exclusive licence’ shall be construed accordingly.

A recent case in the English High Court explores what this definition means, and in particular whether a licence that is stated in a licence agreement to be “exclusive” is, in fact an exclusive licence for the purposes of the PA.

The decision in the case of Oxford Nanopore Technologies Ltd & Anor v Pacific Biosciences of California, Inc & Anor [2017] EWHC 3190 (Pat) was published on 14 December 2017. It is a decision of a (part-time) deputy judge, David Stone, who is a solicitor and a partner at Allen & Overy. The deputy judge reviewed the limited case law in this area, including the recent case of Illumina Inc and Ors v Premaitha Health PLC and Anor [2017] EWHC 2930 (Pat), which this blog discussed here. And, helpfully, he came up with 10 propositions in light of that case law and his assessment of the law, which are reproduced below:

i) Whether or not a licence is an exclusive licence for the purposes of section 67(1) of the Patents Act is a matter for English law: Dendron, paragraph 9;

ii) A licence which purports to be an exclusive licence may not necessarily be so. Identifying an exclusive licence depends on a proper construction of the document or documents: Dendron, paragraph 9. An exclusive licence will be expressly so: circumstances in which an exclusive licence will be implied will be rare, if they exist at all;

iii) It is for the party asserting that it is an exclusive licensee to demonstrate that it is: Dendron, paragraph 9;

iv) The assessment of whether or not a licence is exclusive is not a “once and for all assessment”: Dendron, paragraph 11. An exclusive licence may confer upon the patentee a power to convert the licence into a non-exclusive licence: Dendron, paragraph 11;

v) The “essential element” of an exclusive licence is that is it a licence to the exclusion of all other persons, including the patentee or applicant: Dendron, paragraph 11;

vi) It is possible to have a plurality of exclusive licences in respect of any one patent: Courtauld’s, page 210; Illumina, paragraph 475;

vii) But each exclusive licence may only be granted to one person – a licence will not be exclusive if granted to a number of entities, even if they are under the same control: Illumina, paragraph 254;

viii) An exclusive licensee may grant sub-licences to “persons authorised by him”: Dendron, paragraph 11; Illumina, paragraph 254;

ix) There is a distinction to be drawn between a licence and an equitable right to call for a licence: Courtauld’s, page 210; and

x) Where an equitable right to call for a licence is conditional (as it was in Illumina – the Hong Kong Government had to satisfy itself that the public mission of the Commissioner needs to be fulfilled, or that it is in the public interest to request the licence), the otherwise exclusive licence will remain exclusive unless and until the contractual conditions are fulfilled that enable the grant of the licence: Illumina, paragraph 476.

An interesting point of detail mentioned in this case, that IP Draughts had not previously spotted, is that in the Illumina case, Carr J had held that where an academic licensor reserves rights to use the licensed IP for academic research and publication, this does not prevent the licence from being an exclusive one. At paragraph 475 of the Illumina judgment, as reported in Oxford Nanopore, Carr J said:

475. Premaitha argued that since CUHK had reserved rights to use and develop Lo 2 and Lo 3 for academic research and publication at all times, the licence was not exclusive to Illumina. My conclusion on this issue is the same as in relation to the Quake Patents. The reservation does not extend to authorisation of any third party for commercial purposes. The licence [is] an exclusive licence of the right to exploit for commercial purposes and, according to section 130(7) [Stone: I think this was a reference for section 130(1)] an exclusive licence may be in respect of any right.

David Stone

This conclusion, which was focussed on whether a licence was exclusive for statutory purposes, may also be persuasive when considering the contractual issue, ie whether it is appropriate to describe a licence as exclusive when the licensor reserves rights of this kind.

IP Draughts admires the way in which David Stone has reduced the previous case law to a series of propositions, and hopes that we will see many more decisions by this talented judge in the field of IP agreements.


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How to draft a FRAND licence agreement

2017 has been a productive year for writing activities at Anderson Towers.

Articles in legal journals

Since this morning, IP Draughts’ article, How to draft a licence agreement that is fair, reasonable and non-discriminatory: a 10 point plan, has been available to subscribers on the Oxford University Press (OUP) website for the Journal of Intellectual Property Law and Practice (JIPLP). It is due to be published in the paper version of JIPLP during 2018.

The article considers the implications of the recent, English High Court case of Unwired Planet International Ltd v Huawei Technologies Co Ltd & Anor for drafters of licence agreements. It considers various aspects of this important case, including:

  • how to negotiate in a fair, reasonable and non-discriminatory (FRAND) way
  • how to draft terms that are FRAND
  • the implications of the case, not only for the licensing of standards-essential patents, but also for other types of licence agreement that must be FRAND, including licences granted pursuant to Horizon 2020 grant terms

This article follows the publication of another article by IP Draughts and his colleagues Lisa Allebone PhD and Mario Subramaniam, in JIPLP earlier this year. Contract law for IP lawyers was published in the paper version in October 2017.

In each case, when IP Draughts uploaded the articles to the JIPLP website, the computer told him sternly that articles should be no more than 5,000 words. In fact, both articles are close to 10,000 words. There’s just too much to say…

Books and legal encyclopedias

At the beginning of October, IP Draughts received the first copies of the 4th edition of A-Z Guide to Boilerplate and Commercial Clauses, which had been published by Bloomsbury Professional. Originally published by Butterworths nearly 20 years ago, the 4th edition contains 695 pages of useful information on the reasons for including boilerplate clauses, practice issues that arise, and examples of clauses.

Also recently published was the latest version of the Confidentiality title in the Encyclopedia of Forms and Precedents (LexisNexis). This is one a number of volumes of EF&P that we created some years ago and continue to update. Our other volumes include Research and Development, Patent and Know-how Licensing, and Commercial Services.

Policy submissions

Last Friday, the Law Society of England and Wales submitted to UK government ministers and officials a paper on Brexit and IP that had been written jointly by the Law Society, Chartered Institute of Patent Attorneys, Chartered Institute of Trade Mark Attorneys, IP Bar Association and IP Federation. IP Draughts was the lead author of this paper. It should be made available on the Law Society website early in the new year.

Happy reading!

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IP Draughts’ table of tables 2018

It’s that time of the year again, when the nights are drawing in, and IP Draughts prepares his traditional table of UK IP transactional lawyers. As in previous years, this table simply identifies UK lawyers who appear on both the IAM Patent 1000 list of UK patent licensing lawyers and the Chambers Directory list of UK transactional life science lawyers (which was published earlier today).

This year, the following individuals make it on to the list:

Highly recommended in IAM Patent 1000, recommended in Chambers UK Life Sciences
Laura Anderson – Bristows LLP
Mark Anderson – Anderson Law LLP
Malcolm Bates – Taylor Wessing LLP
Patrick Duxbury – Gowling WLG
Daniel Pavin – Covington & Burling LLP
Chris Shelley – Penningtons Manches LLP
Sally Shorthose – Bird & Bird LLP
John Wilkinson – Cooley LLP

Recommended in IAM Patent 1000 and recommended in Chambers UK Life Sciences
Richard Binns – Simmons & Simmons LLP
Allistair Booth – Pinsent Masons
Alison Dennis – Fieldfisher LLP
Jim Ford – Allen & Overy LLP
Michael Gavey – Simmons & Simmons LLP
Mark A Lubbock – Ashurst
Nicola Maguire – Cooley LLP
Lucinda Osborne – Covington & Burling LLP

There are two new names compared with last year: Richard Binns and Allistair Booth (both of whom are leading practitioners and IP Draughts thinks they should be in this table). Stephen Reese of Clifford Chance has dropped off the IAM list so does not make it into the above table. Some other worthy licensing lawyers fail to make the table as they are not recognised life science specialists, including Matthew Warren of Bristows. And some, such as IP Draughts’ partner Lisa Allebone, have made the IAM list and are recommended as “up and coming” in the IP section of Chambers, but have not yet made the UK Life Science list.

Congratulations to all of you!

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