Contents of Forms (In text and on CD-ROM) 1 Some Premises and Commentary... 1 Form 1.01 Construction... 13 2 Legal Principles... 15 Form 2.01 Definition of Licensed Information... 18 Form 2.02 Assignment of Patent and Right to Sue for Past Infringement... 28 Form 2.03 Assignment of Future Inventions... 31 Form 2.04A Joint Ownership of Patents... 33 Form 2.04B Joint Ownership of Patents Sharing... 34 Form 2.04C Worldwide Rights to Exploit Jointly-Owned Patents... 35 3 Enforcement of Licensed Patents... 37 Form 3.03 Examples of Allocation of Rights to Sue for Infringement in an Exclusive License... 47 Form 3.03A... 47 Form 3.03B... 47 Form 3.03C... 48 Form 3.03D... 48 Form 3.03E... 48 4 Express Agreements: Nonexclusive Licenses, Nonassertion Agreements, and Exclusive Licenses... 51 Form 4.01 Nonexclusive License Grant... 53 Form 4.02A Covenant Not to Sue... 55 Form 4.02B Nonassertion Clause in License Agreement... 56 xxiii
xxiv Drafting Patent License Agreements Form 4.02C Limit on Scope of Nonassertion Agreement... 57 Form 4.02D Assignment of Covenant Not to Sue... 58 Form 4.02E Extend Nonassertion to Customers... 61 Form 4.03A Representation of No Prior Licenses... 61 Form 4.03B Sublicense Rights in an Exclusive License... 65 Form 4.03C Minimum Annual Royalty Provision... 67 Form 4.03D Conversion to Nonexclusive... 68 Form 4.03E Disclaimer of Obligation to Exploit... 69 Form 4.03G Assignment of Exclusively Licensed Patent... 71 5 Specific Types of Licenses... 73 Form 5.03A Right to Grant Sublicenses... 80 Form 5.03B Post-Termination Sublicense Rights... 82 Form 5.03C Post-Termination Sublicense Rights... 82 Form 5.03D Early Termination of Sublicenses... 82 Form 5.03E No Bundling of Sublicensed Rights... 83 6 Implied Licenses and Patent Exhaustion... 89 Form 6.04A Disclaimer of Implied License Based on Existing License Agreement... 98 Form 6.04B Definition of Licensed Product... 99 Form 6.05 Limited License Pursuant to Sale... 101 Form 6.06A Authority to Sell Conditioned on Royalty Payment... 103 Form 6.06B Grant Clause for Component of Patented Product... 106 Form 6.07 Grant Clause for Component of Patented Product... 110 Form 6.08 Provision Imposing Contractual Restriction on Licensee s Customers... 114 Form 6.09 Notice Obligation Imposed on Territorially Restricted Licensee... 116 7 Issues in License Agreement Negotiation... 117 Form 7.03 Negotiation Agreement... 122 8 The Opening Part of the Agreement... 125 Form 8.00 Agreement Opening... 125 Form 8.02A Agreement Opening... 127 Form 8.02B Corporate Component Definition... 128 Form 8.02C License Restricted to Company Component... 128 Form 8.03 Agreement Recitals... 129
Contents of Forms xxv Form 8.04 Modern Agreement Opening... 130 Form 8.05 Agreement Format... 132 9 Definitions... 135 Form 9.00 Structure of Article Setting Forth Definitions... 136 Form 9.01 Examples of Stipulative Definitions... 140 Form 9.03A Licensed Patents Definition 1... 142 Form 9.03B Licensed Patents Definition 2... 143 Form 9.03C Controlled Patents Definition... 143 Form 9.03D Patents Definition... 144 Form 9.03E Licensed Patents Definition 3... 144 Form 9.03F Licensed Product Definition... 145 Form 9.03G Valid Claim Definition... 146 Form 9.03H Third Party Definition... 148 10 The Granting Clause; Elements of the Grant; Definition of Licensed Subject Matter... 149 Form 10.01A Definitions of Subsidiary (Alternate), Controlled Company, and Affiliate (Alternate)... 151 Form 10.01B Subsidiaries Receive License Only Upon Notification to Licensor... 153 Form 10.01C Definition of Licensed Patents (to Include Inventions Made Within Five Years of Execution)... 154 Form 10.01D Definition of Licensed Patents (including all international patents)... 155 Form 10.01E Licensed Patents (in terms of products claimed)... 156 Form 10.01F Patent Expiration Provision... 157 Form 10.01G Limitation of the Have-Made Grant... 160 Form 10.01H Definition of Licensed Apparatus Otherwise Disposed Of... 160 Form 10.01I Disclaimer of Contractual Restraint on Export... 162 Form 10.01J Disclaimer of Contractual Restraint on Export, Reservation of Foreign Patent Rights... 163 Form 10.01K Required Notice on Resale Under Foreign Patents... 163 Form 10.02A Definition of Licensed Products (Broad)... 164 Form 10.02B Detailed Definition of Licensed Products... 164 Form 10.02C Definition of Licensed Products (Narrowed)... 165
xxvi Drafting Patent License Agreements 11 Reservations and Improvements... 167 Form 11.00A Examples of a Reservation of Rights in Grantor... 168 Form 11.00A1... 168 Form 11.00A2... 168 Form 11.00A3... 168 Form 11.00B Reservation (Prior Licenses) 1... 169 Form 11.00C Reservation (Prior Licenses) 2... 169 Form 11.00D Reservation (Future Licenses)... 170 Form 11.00E Reservation (Prior Licenses) 3... 171 Form 11.01A Improvement Definition... 172 Form 11.01B Improvement Definition (Process)... 173 Form 11.01C Improvement Exclusion... 173 Form 11.01D Improvements Definition (Broad)... 173 Form 11.01E Improvement Grant Clause... 173 Form 11.01F Grantback License... 174 12 Royalties, Reports, and Payments... 175 Form 12.01A Value-Added Royalty Base... 184 Form 12.01B Net Selling Price Defined... 186 Form 12.01C Net Sales Price Defined (Alternate)... 186 Form 12.01D Intracorporate Sales Transactions... 186 Form 12.01E Royalties for Transactions Not Arm s Length... 187 Form 12.01F Complex Net Sales Definition... 188 Form 12.01G Royalties on Other Dispositions of Licensed Products... 190 Form 12.01H Royalties on Otherwise Disposed Of Products... 191 Form 12.01I Royalty on Components Not Sold Separately... 191 Form 12.01J Royalty Stacking Provision... 192 Form 12.02A Royalty Obligation Sold or Otherwise Disposed Of... 193 Form 12.02B Royalty Obligation Different Countries of Manufacture and Sale... 194 Form 12.02C Royalty Obligation Process of Manufacture... 194 Form 12.02D Royalty Obligation Product of Licensed Process Made and Sold... 194 Form 12.03A Reporting Provision... 195 Form 12.03B Post-Termination Report... 196 Form 12.03C Royalty Obligation and Termination... 196
Contents of Forms xxvii Form 12.03D Royalty Accrual... 196 Form 12.03E Alternative Royalty Accrual... 196 Form 12.03F Late Payments... 197 Form 12.04A Minimum Royalty Provision... 199 Form 12.04B Minimum Royalty Provision (Alternate)... 199 Form 12.05A Records and Audits... 200 Form 12.05B Records and Audits With Time Limit... 200 Form 12.05C Audit of Competitor s Records... 201 Form 12.05D Audit of Competitor s Records (Alternate)... 201 Form 12.06A Inflation Adjustment Clause... 202 Form 12.06B Alternate Inflation Adjustment Provision... 203 Form 12.07 Licensee Nomenclature Provision... 203 13 United States Tax Issues Relating to Transfers of Patents and Know-How... 205 14 Protection for a Nonexclusive Licensee... 215 Form 14.00A Most Favored Licensee Provision... 223 Form 14.00B Most Favored Licensee Provision (Alternate)... 224 Form 14.00C Most Favored Licensee Provision (Alternate)... 226 Form 14.01A Third-Party Infringement Provision... 229 Form 14.01B Third-Party Infringement Provision (Alternate Remedy)... 230 15 Transferability of Rights and Obligations of License Agreements... 231 Form 15.00A Assignment at Will... 233 Form 15.00B Assignment at Will (Alternate)... 234 Form 15.00C No Assignment... 235 Form 15.00D Reasonable Withholding of Consent... 236 Form 15.00E Reasonable Withholding of Consent (Alternate)... 236 Form 15.01A Assignor Representation 1... 237 Form 15.01B Assignor Representation 2... 237 Form 15.01C Assignment of Licensed Patent 1... 239 Form 15.01D Assignment of Licensed Patent 2... 239 Form 15.02 Assignment by Licensor... 240 Form 15.03A Assignment by Licensee... 241 Form 15.03B Assignment With Merger, Consolidation, or Sale of Business... 241
xxviii Drafting Patent License Agreements Form 15.03C Additional Limitation of Licensee s Assignment... 242 Form 15.03D Termination for Change of Control... 243 Form 15.03E Definition of Change of Control... 243 16 Representations and Warranties and Negation of Implications... 247 Form 16.00A Warranty of Right to Grant License... 249 Form 16.00B Licensor Warrants It Will Use Due Care to Secure Ownership of Future Inventions by Its Employees... 249 Form 16.00C Licensor Obligates Itself to Secure Ownership of Future Inventions by Its Employees... 250 Form 16.00D Qualification of Licensor s Obligation to Secure Rights to Grant Licenses on Future Inventions... 250 Form 16.00E Elimination of Patent Rights Acquired by Payment From Scope of License Grant... 250 Form 16.00F Licensee Has Option to Obtain License Under After-Acquired Patents... 251 Form 16.00G Patent-Related Assurances to the Buyer of a Business... 251 Form 16.00H Knowledge Definition... 253 Form 16.00I Alternative IP Warranties to the Buyer of a Business... 253 Form 16.00J Warranty of Actual Exclusivity... 254 Form 16.01 Negation of Implications by Licensor... 255 17 Indemnification and Liability Insurance... 257 Form 17.00A Mutual Indemnity for Collaboration... 259 Form 17.00B Defend Obligation... 261 Form 17.00C Defend Obligation Alternate... 261 Form 17.00D Control of Settlement by Indemnitor... 262 Form 17.00E Consequential Damage Disclaimer... 262 Form 17.00F Mutual Indemnity in License Agreement... 264 Form 17.00G Infringement Indemnity... 265 Form 17.00H Infringement Indemnity: Limited Liability... 266 Form 17.00I Indemnity Cap... 267 Form 17.00J Limiting Liability... 269 Form 17.01 Indemnification by Licensor... 270 Form 17.02A Indemnification by Licensee... 271
Contents of Forms xxix Form 17.02B Trademark Disclaimer... 272 Form 17.03 Mutual Indemnity... 272 Form 17.04A Licensee to Obtain Insurance... 274 Form 17.04B Licensee to Obtain Insurance (Alternative)... 274 18 Licensing of Pending Patent Applications... 277 Form 18.00A Royalties Under Pending Patent Application Alternative 1... 279 Form 18.00B Royalties Under Pending Patent Application Alternative 2... 279 Form 18.00C Royalties Under Pending Patent Application Alternative 3... 279 Form 18.00D Royalties Under Pending Patent Application Alternative 4... 280 Form 18.01A Filing and Prosecution of Applications in University License... 281 Form 18.01B Filing and Prosecution of Applications... 282 19 Alternative Dispute Resolution... 285 Form 19.00A Dispute Resolution Negotiations 1... 286 Form 19.00B Dispute Resolution Negotiations 2... 286 Form 19.00C Dispute Resolution Negotiations: Standstill and Confidentiality... 287 Form 19.01A Mediation Provision 1... 287 Form 19.01B Mediation Provision 2... 288 Form 19.01C Mediation Provision 3... 288 Form 19.02A Arbitration Provision 1... 290 Form 19.02B Arbitration Provision 2... 291 Form 19.02C Arbitration Provision 3... 292 Form 19.02D Adopted Arbitration Rules... 294 Form 19.02E Arbitration Confidentiality... 298 Form 19.03A Staged ADR Provision 1... 299 Form 19.03B Staged ADR Provision 2... 300 20 Common Provisions of Consequence... 303 Form 20.00A Choice of Law Provision 1... 308 Form 20.00B Choice of Law Provision 2... 308 Form 20.00C Choice of Law Provision 3... 309 Form 20.00D Choice of Law Provision 4... 309 Form 20.00E Opt Out of UCITA... 310 Form 20.00F Choice of Law and Venue Provision... 311 Form 20.00G Alternative Venue Provision 1... 311
xxx Drafting Patent License Agreements Form 20.00H Alternative Venue Provision 2... 312 Form 20.01A Notice Provision 1... 312 Form 20.01B Notice Provision 2... 313 Form 20.01C Notice Provision 3... 313 Form 20.02A Marking Provision 1... 315 Form 20.02B Marking Provision 2... 315 Form 20.02C Marking Provision 3... 316 Form 20.02D Marking Provision 4... 316 Form 20.03A Force Majeure Clause... 317 Form 20.03B Force Majeure Clause Protection in Exclusive License... 317 Form 20.03C Force Majeure Clause Exception for Fixed Payments... 318 Form 20.04 Severability Provision... 318 Form 20.05 Course of Conduct Disclaimer... 320 Form 20.06 Nonwaiver Provision... 320 Form 20.07A Integration Provision... 325 Form 20.07B Express Negative Covenant in Field of Use License... 327 Form 20.08A Government Approval Provision 1... 327 Form 20.08B Government Approval Provision 2... 328 21 Term and Termination of the Agreement... 329 Form 21.01A Term and Termination... 331 Form 21.01B Term and Termination (Alternative)... 332 Form 21.02A Termination for Breach... 334 Form 21.02B Specifying Material Breach... 335 Form 21.02C Automatic Termination for Uncured Breach... 335 Form 21.03 Termination on Change of Control... 336 Form 21.04 Termination for Uncured Breach Not the Sole Remedy... 337 22 Execution of Agreements: Problems of Authority and Proof... 339 Form 22.00A Assent... 340 Form 22.00B Quiet Enjoyment... 341 Form 22.01A Execution Paragraph... 344 Form 22.01B Execution Paragraph (Alternate)... 344 Form 22.01C Execution Paragraph (Alternate for Geographically Dispersed Parties)... 345 Form 22.01D Execution Paragraph (Individual)... 345 Form 22.01E Execution Paragraph (Partnership)... 346
Contents of Forms xxxi Form 22.02A Signature Line... 347 Form 22.02B Signature Line (Alternative)... 347 Form 22.02C Notarized Acknowledgment... 350 Form 22.02D U.S. Consular Notarization... 350 23 Bankruptcy Law Considerations... 351 Form 23.03 Intellectual Property Agreement for Bankruptcy... 359 Form 23.04A Intellectual Property Agreement for Bankruptcy... 363 Form 23.04B Assignment Restrictions... 365 Form 23.04C Two-Notice Termination Provision... 366 Form 23.04D Single-Notice Termination Provision... 366 24 Validity and Construction of Patents... 369 Form 24.00A Conditional No Challenge Clause... 370 Form 24.00B Procedural Ground Rules for a Validity Challenge by the Licensee... 370 Form 24.00C Disclosure of Basis for Invalidity of Licensed Patent... 372 Form 24.00D Effect of Judgment Dealing With Patent Validity or Scope... 372 25 Settlement of Patent Litigation... 377 Form 25.00A Release for Past Infringement... 378 Form 25.00B Release for Future Infringement... 378 Form 25.00C Limitation on Geographic Scope of Release or License... 379 Form 25.00D Release of Claims Based on Confidential Information... 382 Form 25.00E Release Conditioned on Compliance With Other Terms... 383 Form 25.01A Stipulation of Dismissal With Prejudice... 385 Form 25.01B Dismissal of Suit Deferred... 386 Form 25.02A Limitation on Publicizing Settlement... 387 Form 25.02B Exceptions to Confidentiality... 387 Form 25.02C Requirements Imposed to Ensure Compliance With Limited Publicity... 388 Form 25.03 Accused Infringer Waives Right to Relitigate Validity and Enforceability... 390 26 Confidential Disclosure Agreements... 391 Form 26.00A Definition of Confidential Information 1... 392 Form 26.00B Definition of Confidential Information 2... 393
xxxii Drafting Patent License Agreements Form 26.00C Exclusions from Confidential Information... 394 Form 26.00D Exclusions from Confidential Information (Addition)... 394 Form 26.01A Scope of Disclosure... 395 Form 26.01B Warranty of Disclosure... 395 Form 26.01C Approval of Disclosure... 396 Form 26.02A Confidentiality Obligations... 396 Form 26.02B Limit on Use... 397 Form 26.03 Residual Rights... 398 Form 26.05A License Option... 399 Form 26.05B Terms of the License Option... 400 27 Agreements Concerning the Sale or Other Transfer of Unpatented Technological Values... 401 Form 27.03A Outline of Technology License Terms 1... 408 Form 27.03B Outline of Technology License Terms 2... 410 Form 27.03C Outline of Technology License Terms 3... 411 Form 27.03D Definition of Technology (pharmaceutical)... 413 Form 27.03E Definition of Technology (computer)... 413 Form 27.03F Definition of Licensed Technology... 414 Form 27.03H Definition of Proprietary Information... 414 Form 27.03I Technology Transfer Delivery Terms... 416 Form 27.04A Broad Disclaimer of Licensor Liability... 417 Form 27.04B Limited Warranty by Licensor... 417 Form 27.04C Disclaimer of Liability by Licensor of Early Development Stage Technology... 418 Form 27.04D Disclaimer of Obligation to Supply Specific Information... 418 Form 27.04E UCC-Based General Disclaimer... 419 Form 27.05A Disclaimer of Restriction of Technology Licensee... 420 Form 27.05B Limitation on Licensee s Use of Proprietary Information... 420 Form 27.05C Supplier of Technical Information Periodically Notifies Licensee After Information Becomes Non-Proprietary... 421 Form 27.06A Proprietary Information Definition... 422 Form 27.06B Treatment of Licensed Know-How on Early Termination of the License... 423 28 Collaboration Agreements... 425 Form 28.01 Diligence and Unilateral Control... 428 Form 28.02A Milestone Payments... 429
Contents of Forms xxxiii Form 28.02B Contributions to the Collaboration... 430 Form 28.02C Expense and Revenue Balancing Provision... 431 Form 28.02D Opt-Out Terms and Consideration... 432 Form 28.03A Collaboration Intellectual Property Allocation Definitions... 433 Form 28.03B Ownership Allocation in Collaboration Agreement... 435 Form 28.03C Enforcement of Jointly Owned Collaboration Patent Rights... 437 Form 28.03D Prosecution and Maintenance of Jointly Owned Patent Rights... 439 Form 28.03E Allocating Ownership of All Inventions to Single Party... 442 Form 28.03F License Grant for Collaboration Activities... 443 Form 28.03G License for Collaboration Product After Funding Discontinuance... 444 Form 28.04A Prosecution of Collaboration Patent Rights... 444 Form 28.04B Enforcement of Collaboration Patent Rights... 445 Form 28.05A Provisions Surviving Termination... 446 Form 28.05B Accrued Rights on Termination... 447 29 Cross-Border Licensing Issues... 449 Form 29.00A Place of Payment, Rate of Exchange, Tax Burden... 450 Form 29.00B Place of Payment, Rate of Exchange, Tax Burden Allocated... 451 Form 29.00C Tax Burden Allocated... 452 Form 29.01A Government Approval Required for Agreement to Become Effective (Alternative 1)... 453 Form 29.01B Government Approval Required for Agreement to Become Effective (Alternative 2)... 453 Form 29.02A Licensee Required to Register Agreement... 455 Form 29.02B Alternate Licensee Recording Requirement... 455 Form 29.03A Agreement Terminable Due to Government Action... 456 Form 29.03B Agreement Terminable by Licensor... 456 Form 29.04 Choice of Applicable Law... 457
xxxiv Drafting Patent License Agreements Form 29.06A Choice of Language... 459 Form 29.06B Alternate Language Originals... 459 Form 29.07 Definition of Patents and Licensed Patents (Including Foreign Rights)... 461 30 Export Laws and Regulations of the United States... 463 Form 30.00A Written Assurance of Foreign Licensee That It Will Not Reexport Technology and Products of the Technology If Subject to U.S. Security Regulations... 467 Form 30.00B Generic Written Assurance of Foreign Licensee That It Will Not Reexport Technology and Products of the Technology If Subject to U.S. Security Regulations... 468 Form 30.00C Export Control Notice... 469 31 University and Government Licensing... 471 Form 31.00A Representation Regarding Bayh-Dole Act... 476 Form 31.00B Representation Regarding Receipt of Government Funds... 477 32 Selected Competition Law Issues... 483 Form 32.03 Agreement Terms for Multipatent Licensing... 515 Form 32.04A Label License Notice... 524 Form 32.04B Agreement Terms That Authorize a Party Other Than the Patent Owner to Extend Label Licenses to Purchasers of an Unpatented Component... 525 Form 32.04C Grant Clause for Licensing a Nonstaple Component... 527 Form 32.05A Supplier License Limitation to Avoid Double Royalties... 533 Form 32.05B Customer License Limitation to Avoid Double Royalties... 533 Appendix A Antitrust Guidelines for the Licensing of Intellectual Property... 535 Appendix B Assignments... 569 Form B1 Simple Assignment of an Issued Patent by a Corporation... 569 Form B2 Assignment of a Pending, Previously Assigned Application by an Owner Other Than the Inventor... 570
Contents of Forms xxxv Form B3 Assignment of an Invention, With Ensuing Patent Rights by the Inventor to a Corporation... 570 Form B4 Agreement of Assignment by One Company to Another (With Separate Recordable Assignment)... 571 Appendix C Simple License Agreement... 575 Form C Simple License Agreement... 575 Appendix D Nonexclusive License Agreements... 577 Form D1 A More Complex Nonexclusive Cross-License Agreement With Royalties on Net Sales... 577 Form D2 Nonexclusive License Agreement With Inflation Provision... 585 Appendix E Defined Field Patent License Agreement... 593 Form E Defined Field Patent License Agreement (Exclusive)... 593 Appendix F Patent and Technical Information License Agreement... 603 Form F Patent and Technical Information License Agreement (Nonexclusive)... 603 Appendix G Confidential Disclosure Agreements... 613 Form G1 Confidential Disclosure Agreement for Manufacture of Products for Discloser by Disclosee... 613 Form G2 Confidential Evaluation Agreement with Option Terms... 615 Form G3 Confidential Disclosure Agreement (One Way Out)... 620 Form G4 Confidential Disclosure Agreement (One Way In)... 623 Form G5 Confidential Disclosure Agreement (Mutual)... 626 Appendix H Forms for Dealing With Outside Submissions... 631 Form H1 Outside Submission Form Where Compensation Is Not Expected... 631 Form H2 Outside Submission Form Where Compensation Is Hoped For... 632 Form H3 Clauses for Use in Acceptance of a Submitted Idea... 634 Appendix I Employment Agreement... 637 Appendix J Simple Collaboration Agreement... 643