A summary of terms that should be included in licence agreements. Presented at an ASEAN-USPTO Program on Technology Transfer in Bangkok, Thailand, July 2, 2009.

2.  Many examples of licenses and
agreements available
 Actual form of clauses not important,
content is
 Clause by clause review doesn’t deal
with language but the concepts

3.  Business Terms - Use of a
term sheet or Memorandum
of Understanding
 Reviewing the first draft
 Associated Documents

4.  Not legally binding
 Statement of
background and
intentions
 Good place to identify
problems such as
conflicts of interest

5.  What should be defined; avoided
 Capitalize defined terms
 External references to other material
 Consistency among agreements
 Reference appendices for variable
information
 Watch for ‘cut and paste’ definitions

6.  Exclusive versus non-exclusive
 Transferable versus non-transferable
 Field of use / Territory
 Right to sublicense
 Use of Technology
 Grant of License to an affiliated
company
 Cross-licensing
 Improvements

7.  Reservation of certain rights by the
Licensor
 Non-commercial purposes

8.  Right to Sublicense
 Control over Sublicensing
 Approvals: consent versus notice, timelines
 Flow through provisions: indemnity, royalties
 What happens in the event of default of the
head licence (comfort letters)
 End licenses (often attached as an
appendix)
 Obligation to submit copies of licences

9.  Fully paid up Licenses
 Royalties based upon gross,
net or product sales
 Royalty “reach through” on sublicences
 Minimum royalties (creditable?)
 Milestone payments
 Interest on over-due amounts
 Stacking provisions
 Abeyance of payment pending results of
infringement action

10.  Management may pass from licensor to
licensee over time
 Issues of control, report, consent and
abandonment
 Who pays?
 Who is the assignee?
 Obligation to mark or label licensed
products

11.  Use and scope of an indemnity
 Limitation on amount of claim

12.  Who wants them
 Who should give them
 What does a Licensor warrant?
› Different types of licensors
› What can you actually control?
 Ownership; non-infringement
 Disclaim technology “fitness for purpose”

13.  Permitted circumstances of disclosure
 What constitutes “confidential
information”
 Importance of confidentiality for trade
secrets or know-how

14.  Report of activities with respect to
exploitation of the technology
 Frequency
 Right to audit
 Accounting
standards

15.  Term of the license
 Events of termination
› Automatic (insolvency)
› Curable breaches
 Termination process
 Consequences to sub-licensees of
terminating the head licence

16.  Public liability or product liability
insurance
 Absolute need for both in most
circumstances
 Indemnity vs. Insurance

17.  Proper law of the contract
 Attornment clause

18. Marcel D. Mongeon
+1 (905) 390 1818
marcel@mongeonconsulting.com