MaRS Event Series,BioEntrepreneurship-IntellectualProperty Strategy

Ownership and Inventorship Issues

•Anita Nador, Partner, McCarthy Tétrault LLP

(anador@mccarthy.ca)

•December 4, 2006

What Will We Cover?

1. Intellectual Property (IP)Ownership

2. Inventorship (Patents)

3. Best Practices

Intellectual Property

• Patents

• Trade-Secrets/Know-how

• Copyright (incl. moral rights waiver)

• Trade-marks (incl. good will)

• Others

Why Is Ownership Important?

• Want to make sure you have anasset that you can:

• Use

• Sell

• License

• Enforce against third parties

• Otherwise extract value from (e.g.attract investors)

Why is it Important?

! Ownership or license right is fundamental to

any IP Agreement or financing.

! Minimal IP due diligence is to verify

ownership/license rights.

How Do You Gain The Right To IP?

! You created it (e.g., for patents - inventor or

employer engaging other!s to create).

! An assignment gives you all of the legal title

and right and interest in the IP.

! In a license, the IP owner retains the legal

title, but leases all or part of the intellectual

property right to you.

Creation - Inventorship

• For Patents, inventor is first ownerunless there is an agreement orrelationship to indicate otherwise.

• Inventions developed “during thecourse of employment” are generallyconsidered to be owned by theemployer.

Inventorship

• In the steps leading from conception topatentability, the inventor(s) may utilizethe services of others, who may be highlyskilled, but those others will not beco!inventors unless they participated inthe inventive concept as opposed to itsverification.

• Apotex Inc. v. Wellcome Foundation Ltd.,[2002] 4 S.C.R. 153

IP Inventorship/Ownership

! Inventorship is distinct from ownership.

! Inventorship is distinct from authorship.

! Inventorship not determined by contract. It isgoverned by patent law of each jurisdiction.

! Ownership can be determined by contract.

Beware of Joint/Co-Ownership Provisions

Canada! Cannot dilute “quid” of

other co-owner.

! Each co-owner can work theinvention themselves andcan assign their entire rightto one other but cannotlicense right or assign tomore than one assigneewithout consent of other co-owner or accounting toother co-owner.

! Forget v. Specialty Tools ofCanada Inc. (1992), 48C.P.R.(3d) 323, aff’d(1995), 62C.P.R. (3d) 537 (B.C.C.A.)

United States! Can dilute “quid “of other co-

owner.

! Each co-owner can licenseright or assign to more thanone assignee withoutconsent of other co-owneror accounting to other co-owner.

! Absent agreement tocontrary, all co-owners mustbe party (plaintiff) toinfringement suit

! Ethicon Inc. v. United StatesSurgical Corporation 135 F.3d 1456 (Fed. Cir. 1998) 35USC 262.

IP Due Diligence - Ownership

• Identify all parties involved with orhaving access to business/IPdevelopment.

• Make sure you have agreements andprocedures in place outlining theirobligations to you.

• EE, Confidentiality, Collaboration,Assignment, License Agreements.

3rd Party

Collaborators

University Policies

Students/Post-Docs

TechniciansUniversity Collaborations

Funding Source

Academic Lab

(PI)

Academic Lab

Company

Funding Source

(3rd Party)

EEs

(i) Consultants

(ii) 3rd Party

Collaborations(iii) Suppliers

(iv) Distributors

Funding Source (Co.)

Company

IP Due Diligence - Ownership

! Check Title and Prior/Future Obligations andEncumbrances:

" Assignments/Title on record in patentoffices

" Employee/contactor agreements

" Funding Sources

" Collaborations/licenses

" Encumbrances: Liens/Securities

" Ongoing IP Practices (CDAs, InventionDisclosures, Security Procedures)

Major Points That Will Be Considered WhenReviewing Agreements

#$Field & Scope(Ownership/License/CDA)

2. Termination provisions:

Termination triggers (licenses,CDAs)

Contract termination proceduresand survival clauses (EE, CDAs,licenses)

1. Field & Scope

! Sole

! Exclusive

! Non-Exclusive

! Territory

! Subject Matter

2. Termination

! Triggers! Representations and warranties! Deliverables / milestones! Bankruptcy

! Events upon termination

2. TerminationEvents Upon Termination

! Return of all IP rights

! Return of all material / confidential information

! Cease and desist activities

! Final reports, payments, other deliverables

! Survival provisions (e.g. confidentiality)

Components of IP Provisions of EEAgreements

• Grant Clause• Consideration• May have description of Employment.• Confidentiality Clause• Representation that EE not using prior

employers IP or other IP in contraventionof ongoing prior obligation.

• Termination and Survival Clauses:Ongoing obligation regardingConfidentiality and Not Use Your IP forbenefit of future ERs without consent.

Confidentiality Agreements

• Definition of Confidential Information

• Duty to maintain information inconfidence

• Limited generally acceptedexclusions

• Optional publication clause (ifdealing with academic institution,likely required. For company EEs, donot provide publication clause).

Best Practices

• Implementation of Internal IPManagement Systems

• Inventory of IP Assets (current and potentialfuture IP)

• Adoption of internal IP practices to identifyand maintain control over IP:• Security Procedures

• Confidentiality

• Assignments/Licenses

Best Practices

• Inventory and monitoring of 3rd partiesCompany/Academic Lab is involvedwith:• Education

• Communication

• Compliance

• Internal Database:• Diarize action point due dates

• Sort by type of agreements/parties

• Contact people (internal/external)

THANK YOU!