Due Diligence License Agreement

When considering a potential licensing partner, four key areas need to be considered before entering into a licensing agreement: the validity of a patent is related to the scope of the protection, but there are additional considerations for the licensee. In general, a potential licensee can determine the validity of a patent by conducting a state-of-the-art search and verifying the results against the patent claims at issue. However, research and verification of the state of the art can be costly and the potential licensee must decide whether the licensing transaction is large enough to result in such costs. In a situation where the execution of a patent against third-party defendants is likely, it is worthwhile for the licensee to have the research conducted, especially when one considers that the defendants of a infringement action will conduct such a search alone as part of a patent disability strategy. It is impossible to place too much emphasis on the need for the licensee to conduct a thorough due diligence investigation of a potential licensee before he issues a licence to that licensee. Regardless of the scope or extent of the licensing agreement, as soon as a licensee begins to distribute poor quality products, the payment of royalties will be lagging or at another time of the licence, the licensee or the licensee`s property will be damaged and this damage may be irreparable. The sole remedies for the licensee are to bring a breach action and terminate the licence. If the license is terminated, it is likely that the product line covered by the licensee will remain open until a new licensee can be put in place for the next sales season. This will create a gap in the licensing program and the licensee will be deprived of royalties that they would otherwise have collected. For all these reasons, make sure that you can deal with each of these problems concerning a licensee that you deal with seriously in complete confidentiality before signing this license agreement: 2nd experience of the licensee. Does the licensee have any experience with your type of IP? Is it suitable for their product or service line and distribution channels? Check the strength of a licensee in major distribution channels, whether they use a direct distribution, a distributor or broker, or a combination of the two. The use of third parties is common in licensing and it is important to ensure that they have the necessary manufacturing capabilities. 4.

Competing products. Does the licensee deal with other products or services that may be subject to competition? If so, will the licensee devote enough resources and attention to your IP address? If you are considering obtaining a license for your product, you should consider your potential licensees. One of the most important aspects of due diligence for licensees is in-depth substantive review. If your licensee markets a lower version of your product or can`t pay you, your reputation and your business will likely be affected, regardless of the quality of your license agreement. And while you`re busy complaining and ending the deal, you`re missing the royalties you need. The validity and applicability of a patent also requires that the correct activity of the inventor be taken into account. [15] For example, the exclusion of a true inventor or the inclusion of a non-inventor could invalidate a patent. The examiner should identify all issues related to inventiveness by asking the patent holder to provide sufficient documentation, such as a disclosure of the invention.

B which demonstrates that the inventors designed and reduced in practice the specialized technology, and this documentation preferably includes the names and signatures of all inventors. If the incorrect inventor unit has been identified, the licensee should ask the patent holder to take the necessary steps to correct the inventor activity within the Patent Office as soon as possible.