Tech Transfer eNews Blog

Make sure your license agreements don’t unwittingly jeopardize your standing in court

By David Schwartz
Published: November 19th, 2014

In their recent article for JD Supra Business Adviser, patent law experts Patrick Arnez and Sharon Roberg-Perez caution universities on the potential legal consequences of their license agreements, warning that if they cede too much in their agreements they may literally lose the right to protect their own IP.

In some cases, they explain, patent holders — including universities — may unwittingly have transferred away so much of their IP rights that they lose any standing to join suits brought on by their exclusive licensees.

To illustrate, Arnez and Roberg-Perez point to a recent case involving Texas nonprofit Tri-County. After exclusively licensing a wireless communication patent to Texas company Azure, Tri-County gave the company full enforcement and sublicensing rights. Tri-County kept the right to receive a percentage of any litigation or licensing proceeds; a non-exclusive right to practice the technology; the right to terminate the agreement if Azure were in breach; and revisionary rights for the last two years of the patent’s term should Azure choose not to renew the license.

The two entities filed a number of infringement suits as co-plaintiffs, but eventually the district court granted a motion to dismiss Tri-County from the case. “In its view, Tri-County’s exclusive license to Azure transferred so many rights under the patent that it amounted to an assignment,” write Arnez and Roberg-Perez. The rights Tri-County reserved for itself were insufficient to demonstrate IP ownership.

“Lesson of this story? Carefully draft license agreements,” say the authors. “Universities need to know what rights they are transferring, what rights they are retaining, and what rights are needed to maintain standing as a co-owner for litigation.”

Source: JD Supra

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