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Attorney outlines top mistakes in patent licensing and how to prevent them

By Jesse Schwartz
Published: May 12th, 2021

A detailed article on the top patent licensing mistakes appears in the April issue of Technology Transfer Tactics. To subscribe and access the full article, click here. 

During his 34-year legal career focused on technology transfer and licensing, Russell Levine has seen a lot. A partner in the firm of Kirkland & Ellis LLP, he’s widely recognized as an expert in his field. So, his message resonated when he spoke at this year’s virtual AUTM conference about mistakes commonly made when drafting and negotiating patent license agreements.

Noting that patent licensing is a highly specialized and technical field within law and within business, Levine said courts expect participants on both sides of the process to anticipate the variety of issues that — if not addressed in the agreement — can lead to disputes later. Parties to licensing deals are expected “to address within the four corners of the agreement what happens to a sublicense when the master license is terminated. They expect us to identify what terms survive or do not survive the termination of the agreement. They expect us to set forth the details as to whether or not the findings of an audit can be challenged, and if so, how.” IP attorneys, he stressed, “are the ones who are expected to put in the four corners of the agreement language that reflects the intent of our client.”

Once an agreement is signed, the words used are the same words courts will use in any dispute. “We need to recognize that … patent license agreements are contracts,” Levine stated. “Most contracts are enforced by courts as they are written. The court is not going to rewrite the contract for us no matter how inequitable it may seem.”

To help TTOs prevent disputes and ensure all their rights and revenues are preserved, Levine delved into a range of common mistakes made when drafting and negotiating patent license agreements. Here’s the list – more details describing each mistake and strategies for avoiding them are available to subscribers in the April issue of Technology Transfer Tactics

  1. Failing to include “administrative convenience” language when royalties are paid on worldwide sales.
  2. Failing to distinguish between in-house and outside counsel.
  3. Failing to address whether or how licensees can challenge the findings of an audit.
  4. Failing to recognize that a forum selection clause may preclude a PTAB proceeding.
  5. Limiting the clauses that survive termination of the agreement.
  6. Failing to address the question of whether a sublicense survives termination of the licensor-licensee agreement.
  7. Assuming there’s no real difference between U.S. laws and the laws of other countries.
  8. Including inconsistent provisions.
  9. Conducting inadequate or incomplete due diligence.

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