November/December 2009 / Features
Ten Ways to Avoid IP License Traps
Before closing a deal for the acquisition of critical intellectual property rights, do everything possible to minimize the chance of future problems pertaining to those rights, the authors suggest. They advise doing a final check on the contract and list ten key issues that should be reviewed, including the following:
Make sure the scope of the rights will be broad enough to cover potential future needs as well as current ones. Consider such possibilities as company restructuring and whether distributors or independent contractors might at some point need to be authorized under the license. Clarify responsibility for maintenance and updating of databases. Pay attention to license duration and renewal provisions. If access to the rights might be needed after license termination, e.g. for data retrieval or servicing previously manufactured products, “acquire those rights at the beginning, not at the end of the love affair.” Clarify how implementation and training will be handled and make sure the vendor will be required to defend against third part claims for IP embedded in the licensed IP. Whatever is needed from the vendor, they say, should be in the contract rather than a separate stand-alone agreement.
Finally, set up a dispute resolution procedure, preferably one that will preclude both arbitration and litigation by way of informal talks, and then mediation.
