hot topics in technology transfer and...
TRANSCRIPT
CONFIDENTIAL © Copyright Baker Botts 2016. All Rights Reserved.
Eliot D. Williams
April 2017
Hot Topics in Technology Transfer and Licensing
BAKER BOTTS
Hot Topics in Technology Transfer and Licensing
• University Tech Transfer Issues
– Fostering and Protecting IP
– Meeting a Budget
– Considerations Before Approaching Potential Licensees
• License Agreements
– Approach & Typical Sections
– Performance, Royalty and Other Provisions - Avoiding
Common Pitfalls
– Relevant Law
• Questions
BAKER BOTTS
Fostering and Protecting IP - IP Program
• Establishing (or Revising) a Tech Transfer Program
– IP Brochure - basic information about IP
– IP Policy Manual - the mechanics of IP protection
– Incentives / recognition
• Training
– Introduction to the program & IP primer
– Periodic refresher courses
• Mechanics of Submission of Ideas for IP Protection
– Who should be involved?
– What information should be considered?
– Important issues to address
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Fostering and Protecting IP - Evaluating Ideas
• Screening invention disclosures
• Bar dates / timing issues
• Emergency provisional
• Evaluating submitted ideas
– Invention review meeting
– 101, 102, 103, detectability
– Ownership issues?
– Inventorship issues?
– Commercial potential
– Track record?
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Invention
Disclosure
Concept
Development
Idea
Patent Application
Prepared/Filed
Approve patent
filing
Interview by
Patent Lawyer
Review by PTO Patent Issues
Office Action
Rejecting
Application
Response to Office
Action &
Amendments
Fostering and Protecting IP - Prosecution
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Fostering and Protecting IP - Prosecution
• Other imput?
– patent application still covers licensee product?
– patent application covers likely alternative approaches.
– patent application abandoned?
– provisional application converted?
– PCT application nationalized at 30 months?.
– con filed?
– maintenance fees?
• Default instructions
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Fostering and Protecting IP - Budget
• Prioritize IP
• Periodically prune the portfolio
• Post issue review – Maintain a central repository
– Have point person or team to ensure continuous oversight
– Conduct period portfolio review to weed out low value IP
• Budgets - cost categories
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Considerations Before Approaching Potential Licensees
• Is there a natural partner for this technology?
– Existing licensees for similar technology?
– Student co-inventors?
– Other options?
• Are there realistic potential licensees?
– Track what they are doing in the field, including their IP.
– Relationships?
• How aggressive will University be with this IP?
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License Agreements – Overview
• Patent – Statutory right to exclude others from making,
using, selling, offering for sale, or importing the claimed
invention.
– License – Agreement by licensor to waive its right to
exclude licensee from practicing the claimed invention
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Licensing – Approach
• Establish expectations
– Who brings what to the arrangement?
– What are the ongoing rights of each party?
– What are the ongoing obligations of each party?
– What are the rights and obligations at dispute?
– Who gets what at termination?
– Who bears risk for breach?
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Anatomy of a License: Typical Sections
1. Introduction
2. Definitions
3. Grant of Rights
4. Tech Transfer
5. Confidentiality
6. Consideration
7. Rep and Warrant
8. Indemnification
9. IP Ownership
10.Termination
11.Miscellaneous
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Avoiding Common "Pitfalls"
• Common pitfalls
– Effective Date & Parties
– Definitions
– License Grant
– Consideration
– Reps and Warranty
– Indemnification
– IP Ownership and Enforcement
– Term and Termination
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Common Pitfalls – Effective Date and Parties
• Effective date
– Date from which the agreement becomes binding
• But may trigger for other obligations (e.g., "during the Term")
– Net sales, reporting obligations, accounting, etc.
• Parties
– Who are the parties
• e.g., parent, subsidiaries, affiliates, IP holding companies,
third party beneficiaries, etc.
– Who may become a party?
• e.g., future acquisitions, mergers, etc.
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Common Pitfalls – Definitions
• Field of license
– Restrictions on territory, use, products, or markets
• Licensed technology
– Patents specified by schedule, subject matter, product, etc.
– Includes divisionals, continuations, reissues, CIPs, etc.?
– Relevant period /After-acquired patents?
• Improvements
– Developed separately or jointly
– Grant back clause
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Common Pitfalls – License Grant
• Type of grant
– License vs. covenant
– Exclusive vs. co-exclusive vs. non-exclusive
• Standing to sue
• Restrictions
– By right – make vs. have made
• Right to sublicense
– Responsibilities for performance – royalties, confidentiality
– Restrictions to sublicense – by party; upon consent
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Common Pitfalls – Tech Transfer
• Beyond rights granted, how and when will data be
provided.
– Consider confidentiality obligations.
– Timing and period of exchange.
• Uptime/availability/Quality of service.
• Who will provide technology assistance?
– Who bears the cost?
– Response time
– When and how much support?
• Right to use improvement information.
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Common Pitfalls – Consideration
• Monetary
– Lump sum paid-up front vs. running royalty
– Minimum royalty requirements
– Milestone payments – upon patent grant; regulatory approval
• Taxes and other charges
• Payments
• Reports / audits
– Periodic reports – level of detail
– Data backup & restoration
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Common Pitfalls – Confidentiality
• Physical restrictions
– Where is technical information stored and maintained?
• Limited use or purpose clause
– Define scope and maintain control
• Third party contractors
– Require procedures for third party to sign NDA’s
• "Standard" exclusions (e.g., public domain)
• Time limit / reciprocity
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Common Pitfalls – Reps and Warranties
• Conventional warranties:
– Authorized to enter into agreement
– Title and ownership
– No agreements in conflict
• Controversial warranties:
– Fitness for a particular purpose
– Non-infringement
– Validity / enforceability of patents
– Any other quality, efficacy, safety, patentability concern of
licensed subject matter
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Common Pitfalls – Indemnification
• Division of responsibilities
– Licensor to indemnify for use of licensed IP
– Licensee to indemnify for finished goods & IP misuse
– Confidential information & data security breaches
– Liability related to compliance with laws
• Limitations
– Limit to certain types of infringement
– Limit certain damages (e.g., consequential)
– Monetary cap (e.g., royalties paid)
– Omit damages resulting from modifications, negligence
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Common Pitfalls – IP Ownership / Enforcement
• Existing IP
– Remains with licensor – no implied transfer
• New IP
– What licensor invents, licensor owns – subject to license?
– What licensee invents, licensee owns – subject to license?
– What about joint inventions?
• Joint IP
– Rights of each party – use, licensing, enforcement
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Common Pitfalls – Termination
• Term
– Last to expire of the patents or other term limited IP?
• Termination if:
– Material breach remains uncured after notice
– Failure to exercise diligence or "best efforts"
– Failure to meet milestones
– Bankruptcy considerations
• Surviving provisions
– Confidentiality, IP, representations and warranties
– Typically not required actions
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RELEVANT LAW
• Licensee Estoppel
• DJ Jurisdiction in Licensor/Licensee Context
• Who Must Prove Infringement in Licensor/Licensee Context
• Laches
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Prior Licensee Estoppel Decisions
• Prior to 1969
– Under the doctrine of licensee estoppel ("LE") licensee cannot challenge validity
• Lear v. Adkins, 395 U.S. 653 (1969)
– The Supreme Court abolished LE as a matter of public policy, but the licensee in
Lear had explicitly repudiated the license
• Gen-Probe v. Vysis, 359 F.3d 1376 (Fed. Cir. 2004)
– A licensee in good standing is precluded from filing a declaratory judgment
action due to failure to satisfy the "case or controversy" requirement of Article III,
Section 2 of the U.S. Constitution
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MedImmune – Background
• In 1997, MedImmune agreed to pay
royalties on sales of "Licensed
Products" covered by existing patents and a then-pending patent
application
• The application matured into a patent in 2001
• Genentech demanded royalty for a MedImmune product, which is
(now) covered by the 2001 patent
• MedImmune paid the royalties "under protest and with reservation
of all of [its] rights" and brought the declaratory judgment suit
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MedImmune
• Issue
– Can a licensee in good
standing bring a DJ action
against the licensor?
• Supreme Court
– YES. A patent licensee is not required to terminate or breach the
license agreement prior to seeking DJ of patent invalidity or
non-infringement
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Impact on Patent Licensing
• No more "patent peace" with cross licenses
• Licensee leverage
• "MedImmunize" license agreements
– Termination provisions
– Accelerated / graduated payments
– New resolution procedures
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The Real Mischief – Footnote 11
• Supreme Court attacks the Federal Circuit's rule requiring
reasonable apprehension of (imminent) suit before filing
a DJ action
"A licensee who pays royalties under compulsion of an
injunction has no more apprehension of imminent harm than
a licensee who pays royalties for fear of treble damages and
an injunction fatal to his business."
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Federal Circuit Responds
• SanDisk Corp. v. STMicroelectronics Inc.
(Fed. Cir. March 26, 2007)
– During license negotiations, ST brought three technical
experts to present a "thorough infringement analysis" and
referred to SanDisk's "ongoing infringement"
– BUT ST indicated that it had "absolutely no plan
whatsoever to sue SanDisk"
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"where a patentee asserts rights under a patent
based on certain identified ongoing or planned
activity without license, an Article III case or
controversy will arise . . . "
BAKER BOTTS
Before and After FN #11
287 notice letters that do
not trigger DJ If enough to provide 287
notice, enough to file DJ
Safe harbor for
license negotiations Negotiations amount
to assertion of rights
Patentee writing letters to
resolve disputes Patentee filing lawsuits to
begin negotiations
BEFORE AFTER
Reasonable apprehension
of imminent suit Disagreement over the need
for a patent license
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Medtronic, Inc. v. Mirowski Family Ventures, LLC
• Background
– 1991 – Medtronic licensed patents under a royalty bearing agreement
– 2007 – MFV perceived infringement by Medtronic products
• Medtronic files Declaratory Judgment action (12/17/07)
• All relevant royalties paid to an escrow account
• Question
– Does MFV have to prove infringement even though they would be
precluded from filing an infringement suit (in view of the license)?
– Does Medtronic have to prove non-infringement since they brought
the DJ action?
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Background
• District Court
– MFV has burden of
proving infringement
• Federal Circuit
– Reversed
– Med has the burden of
proving infringement
• Question for the Supreme Court:
– Who caries the burden of proving patent
infringement?
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Supreme Court Decision
• Preliminary issue: there is Federal Jurisdiction
• HOLDING: Patent Owner bears burden of proof on
infringement in declaratory judgment case brought by
licensee
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Supreme Court Decision
• Legal propositions
– Patentee generally carries the burden
– Actions under Declaratory Judgment Act do not change
substantive rights
– Burden of Proof is a substantive matter
• Practical considerations
– Could create confusion regarding patent scope
– Could create situation where licensee must prove negative
– Shifting burden conflicts with the goals of the Declaratory
Judgment Act and MedImmune
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SCA Hygiene Products Aktiebolag v. First
Quality Baby Products, LLC
• Law prior to March 21, 2017:
– Laches is an equitable doctrine that can limit or bar the recovery of patent
infringement damages that accrue prior to filing suit.
– Laches requires proof of an unreasonable delay causes after the patent owner
knew or should have known of the infringement, plus proof of harm resulting
from such prejudice.
• 2014: Supreme Court decides Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S.
___ (2014), abolishes laches in copyright cases.
• 2015: Sharply divided Federal Circuit issues en banc decision confirming
laches remains viable in patent cases.
– Distinguished Petrella after concluding that Congress codified a laches defense in
35 U.S.C. § 282.
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Supreme Court Decision
• Laches abolished in patent cases.
– 35 U.S.C. § 286 “represents a judgment by Congress that a
patentee may recover damages for any infringement committed
within six years of the filing of the claim.”
– Laches was meant to be “gap-filling” and not “legislation-
overriding.”
– Laches was not codified in § 282 - no finding of a “broad and
unambiguous consensus” of common law for such a patent-law-
specific rule.
• Practical Implications on Licensing?
– Delay no longer leads to laches, but consider estoppel.
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Questions?
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