By Fabrice Perbost, Partner, Kahn & Associs Law Firm
When drafting or negotiating a patent license agreement, a number of pitfalls should be avoided or at least have their effects reduced. Failing that, the rights and interests of the company which you represent might be affected, if not altered. Whether you are the patent licensor or the patent licensee, you will find hereinafter the 10 main points that should be borne in mind so as to reduce or remove the major risks occurring upon drafting and negotiating such patent license agreement.
1. What is the subject matter of the license? Although it may appear obvious, the concepts of patent, biological material and know-how are very often not distinguished. However each creation/protection results in specific legal rules and, as the case may be, a specific remuneration method. Once such distinction is operated, you ought to precise the patent type, the registration location and number, etc.. You should also indicate any and all its extensions, continuations, divisions or additions together with any and all additional protection certificates. As regards the biological material, you should cover any and all replication thereof and indicate the registration number and date. Failing that, you might have to pay for a license which does not cover anything or, on the contrary, if you are the licensor, you might license more rights than you had expected. At the same time, you should also verify whether the license is exclusive or non exclusive.
2. Specify the license scope. Is the license applicable to all fields or is it applicable to specific fields (agriculture, pharmaceutical industry, etc.)? After answering this question, you should also indicate whether the license is granted for the sole purpose of experimentation, for clinical trials, or for the purposes of manufacturing, production, marketing, exportation and importation.
3. Who benefits from the license? Is it a company alone, is it some of the group's companies or is it the whole group (subsidiaries, branch offices, etc.)? In this case, you should indicate the shareholding percentage required for such companies to be entitled to said license. For further precision, you may also refer to the articles of the Commercial Code defining the concept of company control (Articles L.233-1, L.233-2 and L.233-3).
4. Which territories? It is generally indicated that the license is granted in all the countries where the patents have been registered...