TO LICENSE OR NOT TO LICENSE: THIS IS THE QUESTION

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1 Studio Legale Bernase & Soci TO LICENSE OR NOT TO LICENSE: THIS IS THE QUESTION LICENSE AGREEMENTS AND ALTERNATIVE MODELS Paola Sangiovanni, Partner

2 SUMMARY LICENSE AGREEMENT Motivations Key issues ALTERNATIVE MODELS Contract vs. Company Key issues of various models PICK THE RIGHT MODEL! Studio Legale Bernase & Soci

3 A STRATEGY QUESTION: DO IT YOURSELF? IN-HOUSE DEVELOPMENT OF TECHNOLOGY: ASK YOURSELF IF THE EXPECTED RETURN IS WORTH THE TIME, COSTS AND ENERGIES INVOLVED (important not to divert the focus of the company!) IF NOT, CONSIDER OTHER STRATEGIES Studio Legale Bernase & Soci

RETURN IS WORTH THE TIME, COSTS AND ENERGIES INVOLVED (important

4 LICENSE AGREEMENT LICENSE AGREEMENT = A CONTRACT IN WHICH THE LICENSOR S PATENT, TRADEMARK, SERVICE MARK, COPYRIGHT, KNOW-HOW OR OTHER INTELLECTUAL PROPERTY IS MADE AVAILABLE TO A LICENSEE in BIOTECH: early licensing vs. late licensing Studio Legale Bernase & Soci

OR OTHER INTELLECTUAL PROPERTY IS MADE AVAILABLE TO A LICENSEE in

5 WHY LICENSING OUT? BENEFITS OF LICENSING OUT: SHIFTS RISKS CONNECTED TO EXPLOITATION OF I.P. TO LICENSEE ALLOWS APPLICATION OF EXISTING TECHNOLOGY TO OTHER FIELDS OR FOREIGN MARKETS IS A WAY TO OBTAIN CROSS-LICENSES UNUSED PORTIONS OF I.P. CAN BE EXPLOITED GENERATES ROYALTIES! ps1 Studio Legale Bernase & Soci

6 Diapositiva 5 ps1 For example, software developed for internal processes. psangiovanni; 23/08/2006

7 LICENSE AGREEMENT: KEY ISSUES Scope Royalty payments Term and renewal IP improvement Warranties Performance standards Quality trol Accounting, reports and audits Technical assistance, training, support Insurance and indemnification Infringements Studio Legale Bernase & Soci

Accounting, reports and audits Technical assistance, training,

8 LICENSE AGREEMENT: KEY ISSUES SCOPE OF THE LICENSE CAREFULLY DEFINE LICENSED I.P. AND RIGHTS OF USE (not too wide!) IMAGINE FURTHER USES OR FIELDS FOR I.P. AND REGULATE THEM RESTRICT TO MARKET OR TERRITORY EXCLUSIVE OR NOT EXCLUSIVE REGULATE SUB-LICENSING AND ASSIGNABILITY TO ANOTHER PARTY AVOID INTERFERENCES TO THE OVERALL BUSINESS PLAN OF THE COMPANY (e.g., use stringent terms when dealing with competitors) Studio Legale Bernase & Soci

AND REGULATE THEM RESTRICT TO MARKET OR TERRITORY EXCLUSIVE OR NOT EXCLUSIVE REGULATE SUB-LICENSING AND

9 LICENSE AGREEMENT: KEY ISSUES CONSIDERATION (i) UPFRONT LUMP SUM (ii) ROYALTIES (on net sales, gross sales, item #,...) (iii) MILESTONES PAYMENT often a combination of the above criteria sometimes: minimum royalties threshold In order to check such criteria: AUDIT RIGHTS OF LICENSOR Studio Legale Bernase & Soci

..) (iii) MILESTONES PAYMENT often a combination of the above criteria

10 LICENSE AGREEMENT: KEY ISSUES IMPROVEMENTS TO I.P. LICENSED I.P. MAY BE IMPROVED BY LICENSOR OR BY LICENSEE REGULATE WHO HAS TITLE AND WHO HAS A LICENSE ON IMPROVEMENTS (or option to purchase them) SPECIFY IF SUCH RIGHTS EXPIRE WHEN THE LICENSE AGREEMENT EXPIRES Studio Legale Bernase & Soci

11 LICENSE AGREEMENT: KEY ISSUES OBLIGATIONS OF LICENSEE: TO PROMOTE TO PRODUCE TO KEEP IN STOCK TO MAINTAIN CERTAIN QUALITY STANDARDS TO BE SUBJECT TO QUALITY CONTROL TO ENSURE AGAINST PRODUCT LIABILITY Studio Legale Bernase & Soci

QUALITY STANDARDS TO BE SUBJECT TO QUALITY CONTROL TO

12 LICENSE AGREEMENT: KEY ISSUES TERM DURATION IMPLIED RENEWAL EARLY TERMINATION EVENTS REGULATE WHAT HAPPENS UPON TERMINATION SELL BACK STOCK RETURN PRODUCTS AND DOCUMENTATION Studio Legale Bernase & Soci

WHAT HAPPENS UPON TERMINATION SELL BACK STOCK

13 ALTERNATIVE MODELS a new company OR an agreement Studio Legale Bernase & Soci

14 ALTERNATIVE MODELS: ASSIGNMENT OF I.P. CONTRACT ASSIGNMENT OF I.P.: NOT A LICENSE AGREEMENT, WHEREBY THE I.P. IS RENTED, BUT A SALE AGREEMENT TITLE PASSES HIGHER CONSIDERATION WARRANTIES OF SELLER ARE CRUCIAL Studio Legale Bernase & Soci

15 ALTERNATIVE MODELS: JOINT RESEARCH CONTRACT 2 OR MORE PARTIES ENTER INTO AN AGREEMENT AIMED AT DEVELOPING A JOINT RESEARCH PROJECT KEY ISSUES: WHO MANAGES & CONTROLS THE PROJECT? WHO PAYS? WHO OBTAINS TITLE TO NEW I.P.? TO IMPROVEMENTS OF BACKGROUND I.P.? TO IMPROVEMENTS OF FOREGROUND I.P.? Studio Legale Bernase & Soci

& CONTROLS THE PROJECT? WHO PAYS? WHO OBTAINS TITLE TO NEW I.P.? TO IMPROVEMENTS OF BACKGROUND I.

16 A NEW COMPANY: SPIN OFF SPIN OFF SEPARATE COMPANY FROM CORE BUSINESS FULLY CONTROLLED START-UP SPIRIT FLEXIBILITY IN STRATEGIES AND ALLIANCES RISK PRONE Studio Legale Bernase & Soci

17 A NEW COMPANY: JOINT VENTURE JOINT VENTURE: 2 OR MORE PARTNERS COMING TOGETHER DEFINE: ROLE OF EACH PARTNER BUSINESS PLAN COMPENSATION OF GOODS/SERVICES PROVIDED BY PARTNERS FINANCING AND DIVIDEND POLICY EXIT STRATEGY ASSETS OF J.V. UPON LIQUIDATION Studio Legale Bernase & Soci

GOODS/SERVICES PROVIDED BY PARTNERS FINANCING AND DIVIDEND POLICY

18 ALTERNATIVE MODEL: SHARE ACQUISITION IN ORDER TO ACQUIRE RIGHTS ON TECHNOLOGY: ACQUIRE THE CAPITAL OF THE COMPANY WHO HAS TITLE ON I.P. by ACQUISITION OF CONTROL OR ACQUISITION OF MINORITY SHARE + OTHER RIGHTS (e.g., information rights, worldwide distribution rights) Studio Legale Bernase & Soci

19 CONCLUSIONS CREATE A STRATEGY FOR YOUR I.P. PICK THE APPROPRIATE LEGAL MODEL CAREFULLY NEGOTIATE KEY ISSUES I.P. CONTRACTS ARE THE FOUNDATIONS OF A BIOTECH COMPANY: ITS FUTURE MAY DEPEND ON THEM! Studio Legale Bernase & Soci

20 THANK YOU FOR YOUR ATTENTION! Questions? Studio Legale Bernase & Soci

Licensing agreements for intellectual property

Licensing agreements for intellectual property Introduction A licensing agreement can be used when you (the licensor) grant certain legal rights to another business (the licensee) to use your intellectual