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The Ownership Dilemma . Ownership of intellectual property considered by investors sought by companies seeking to exploit the intellectual property sought by companies in acquisitions. The Ownership Dilemma . Ownership and research institutions
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The Ownership Dilemma • Ownership of intellectual property • considered by investors • sought by companies seeking to exploit the intellectual property • sought by companies in acquisitions
The Ownership Dilemma • Ownership and research institutions • legislation (Public Servants Inventions Act, Financial Administration Act) • institutional policies • collective agreements • funding agencies
The Ownership Dilemma • Problem • transfer of ownership may be either impossible or impractical • Solution • transfer technology using exclusive licenses • approximate as closely as possible the rights associated with ownership
The Ownership Dilemma • Problem • transfer of ownership may be either impossible or impractical • Solution • transfer technology using exclusive licenses • approximate as closely as possible the rights associated with ownership
What is Ownership? • “The most far-ranging right in rem the law allows to a person: to deal with something to the exclusion of everyone else or of everyone except one or more desingated people” • The Dictionary of Canadian Law, 2nd ed.
What is a License? • A contractual agreement • “A license is fundamentally an agreement by a patent owner not to sue the licensee” • United States Court of Appeal for the Federal Circuit in Fromson v. Western Litho Plate.
Determining the Rights • Owner - the legal rights associated with ownership • impact of common law and legislation • Licensee - the terms of the license agreement • impact of law regarding contracts
Contract Considerations • Definition of licensed rights • are they broad enough? • Sublicensing • is it expressly permitted? • Improvements • which party owns the rights • grant backs?
Contract Considerations • Patent Rights • which party obtains patents • which party bears the cost? • Enforcement of Rights • which party sues infringers? • Termination • is it possible?
Business Considerations • Sale of the Business • can the license be transferred? • Secured Lending • can security be taken in a license? • Insolvency • what are the consequences?
Sale of the Business • Share sale • all assets are included • no assignment necessary • restrictions on change of control • Asset sale • contracts, including licenses, must be assigned • restrictions on assignment • silence on assignment?
Security Interests • Secured Lending • security granted to secure an obligation • eg mortgage • provides priority over other creditors • security attaches to “property” • security can attach to intellectual property • licenses?
Security Interests • Canada • “A dispensation or license properly passes no interest, but only makes a action lawful which without it had been unlawful.” • Heap v. Hartley (1889) (C.A.) - UK case • cases often decide against attachment • U.S. • security can attach • enforcement may be limited
Bankruptcy • Owner • assets devolve to trustee • may be exploited or sold • Licensee • concerns if licensor becomes bankrupt • will licensed rights continue? • issue relates to executory contracts
Bankruptcy • Canada • unclear whether a trustee can disclaim executory contracts • licensees try to avoid executory obligations • Erin Features #1 (1991) B.C. Supreme Court • U.S. • trustees may disclaim executory contracts • licensee may assume the license (s. 365(n))