 |
Wayne Kennard, partner at Hale and Dorr LLP, discussed how to create an effective assertion licensing program. It takes both in-house and outside counsel to look at it. One size does not fit all for a licensing program. One needs to look at one's own business to determine what a licensing program must accomplish.
Kennard recommended reviewing or "vetting" the history and background of the particular piece of intellectual property to make sure the client has a valid right in it and to find any holes in it. In-house counsel may be too close to the IP to "vet" it, so having an outside counsel look at it is crucial. Also, know the scope of your intellectual property right to be licensed and make sure the license reflects that scope for field of use or geographic area of use.
In-house counsel will define the target market for a license program up front. This process takes time with the in-house counsel working with the marketing people. This will affect how you license to various parties, especially if there are multiple "fields of use" for intellectual property rights. The projected life of the intellectual property right may also affect the scope of the licensing, as some forms of IP have a longer life than other forms.
Be aware that every licensee wants favored nation status relative to other licensees, but as a licensor you may not want to give that status to every licensee. The license may also include term and termination to determine who gets what when the license ends. These issues should be examined at the onset.
A big problem for a licensor is policing the license, whether the licensor is small or large. It may also involve foreign licensees in other countries or jurisdictions. The policing mechanism should be viewed generically in terms of how, how often and how much notice to give.
If the license is a "hybrid" license, which covers more than one type of intellectual property, consider separate licenses for each piece of intellectual property. If one piece of intellectual property is ruled invalid, it may jeopardize the entire hybrid license.
Developing a standard license is a difficult issue. You want to make it attractive to potential licensees yet fully protect the licensor's rights. This will require in-house and outside counsel to work together to reach that balance and anticipate every possible contingency.
An attorney or a group specially created to handle licensing may administer the license program. A business group can provide an additional layer of decision-making or buffer when negotiating a license by "running it by legal," whereas an attorney may be expected to alter the terms of the license during direct negotiations. Having the business group administer the licensing program may thus enforce the perception that the terms of the license are truly standard.
In setting standard licensing rates you need to find out the typical licensing rates in the target industry. This may require consulting with accountants or others familiar with the target industry. This allows you to set a slightly higher or lower rate depending on the strength of the IP. Setting licensing rates should also weigh the cost of potential litigation versus licensing fees. If the fees are reasonable, more potential litigants may choose to license rather than litigate, bolstering the licensing program when you eventually encounter someone who chooses to contest the license.
While most people gloss over the definitions in a license, you can win or lose in a licensing program based on how you define its elements. Take care in defining what others are going to get in the license, how they're going to get it, what it's called at the outset. How you define it at the start will determine how it will be applied when adopted.