Licensing Lawyer in Toronto
Stan Benda is a Toronto based Licensing Lawyer who provides a range of cost effective licensing legal services to support companies and individuals involved in the development, distribution and use of intellectual property assets.
If you have IP assets that need licensing, then I can help! Phone me at (416) 366-3538 or use the contact form on this page.
Why choose Stan Benda for your Licensing Needs?
I spent almost 30 years in the Justice Department dealing with all manner and level of contracts and negotiations from privatizing airports to hotels in Banff to genetic technologies. Since 1992 I focused on agricultural biotechnology and advanced technologies both in a domestic, international and UN arenas.
Why hire Stan Benda over a large IP Firm?
Large firms retire — not hire — lawyers of my vintage. Moreover, my years of experience were with governments, universities and international institutions—-parties that I cannot bring to a firm as my “book” or client base.
Hiring Stan Benda is more affordable
The fact I am not at a large Licensing Law Firm allows me to charge less. At a large firm my hourly rate would be over $800/hr. My actual rate is $300. My overhead is much lower.
Sleep better at night knowing Stan Benda will protect your Intellectual Property
Your license or associated technology transfer contracts (material transfer agreements, collaborations, options, confidentiality agreements) will be written in plain language. All the concepts will be explained so you can manage the contract. Indeed, if you prefer, the document can come with a glossary parallel to the contractual narrative. The contracts will reflect the latest law, and use a writing architecture that keeps the key concepts clear and obvious years down the road. I also pride myself on answering phone calls promptly, either when they are made, or shortly thereafter on the same day.
The philosophy I teach and try to follow is apply the law to the deal, not the deal to the law. So creativity and risk management are key.
If you have IP assets that need licensing, then I can help!
Phone me at (416) 366-3538 or use my contact form on this page.
What is Licensing Law
As previously noted a licence is an authorization to use someone’s intellectual property or trade secrets on contractually specified terms. A licence is a permission with conditions. Technically a licence is an estoppe l– it precludes the owner from suing the user as along as the user is in contractual compliance.
It is worth repeating that an IP licence concerns an intangible that is infinitely divisible.
At its most basic, a licensor seeks to economically exploit its property, while a licensee seeks to use that property to generate income. More specifically a licensor seeks amongst other things
- Leverage IP, without the business infrastructure to do use it
- Cross licence to gain access to IP necessary to its product or process
- Extract economic value from non-core business assets
- Extract value through a non-competing use licence.
Conversely a licensee may seek any of:
- Technology crucial to its product or process
- Avoid infringement issues
- Develop an ongoing relationship with the licensor
- Remove a competing product or process.
Business decisions in advance of licensing may include considerations such as:
- What is the IP / subject matter
- Who owns it?
- How many fingers in the pie (joint ownership problems)?
- Any dangling (unperfected) rights to it?
- Any fetters on it?
- Any reach through rights?
- Any foul ups? (maintenance fees paid?)
- What rights does the licensee need versus what is the licensor willing to grant
- Are there other sources for similarly functioning or alternative IP
- Does the licensee require show-how / know-how in addition to the IP
- Does the licensee require technical support
- Are the parties competitors in commerce or research
The essence of a licence, what is often called a “bare” licence has the following elements:
- Grant – sole, exclusive, non-exclusive
- Subject Matter
- Field of Use
- Territory
- Consideration / Royalties
- Improvements
- Term.
Additional common provisions include:
- Assignment
- Indemnity
- Representation and warrants (reps & warrants)
- Sub-licensing.
This is in addition to what is normally required to constitute a contract, e.g. offer and acceptance, certainty of terms, intention to create legal relations, capacity, execution. Also standard contract architecture applies: parties, recitals, consideration, definition, covenants, statements etc.
The first point is what is the subject matter, what is the IP – patent, trade-mark etc.
The grant is the heart of licence. The scope of the grant rights may be:
- Sole – both the licensor and licensee may use the IP
- Exclusive – only the licensee may use the IP, the owner / licensor is prohibited
- Non-Exclusive – the licensor may license more than one party on the same terms or for the same territory.
The next key provision is the field of use. The technology can only be used to make product A, not products B- E or the technology can be used for all patented products A –E.
Territory can be a worldwide, a geographic region, an area or further divided by time (growing season, non-growing season, winter season etc.) Regardless, IP rights must exist in the territory, otherwise a license is not necessary.
Consideration can be money, access to other technology (cross license scenario in part). Frequently it is an income stream better known as a royalty. There are a plethora of royalty regimes or schemes: lump sum on execution, balloon sum on termination, fixed percentage, ascending percentage, descending percentage, minimums, maximums, etc. The nature of the technology and IP rights helps guide the decision. For instance is technology that has a short shelf life, but will be in high demand, will suggest a lump sum tied to a descending royalty rate. A technology that needs to mature and capture a market might suggest a minimum rate tied to an ascending royalty scheme.
Often both the licensee and licensor may make improvements to the technology protected by the IP rights. Does each given the other access to its improvements and on what terms. A grant back is from the licensee to the licensor. The grant forward is from the licensor to the license. Are the terms exclusive? This is an illegal provision in the US and EU, but acceptable in Canada.
Term can be the life of the IP, something shorter, or something staggered, e.g. 3 year renewable terms. Historically the term of licenses was close to the life of the IP. Consequently IP licences should not be viewed as a buy-sell agreement, but rather akin to the commercial marriage. Twenty years is longer than most marriages last, but is a common patent licence term. That means the relationship between the parties must be respected, whereas in a buy-sell it is irrelevant.
As you read the preceding paragraphs, the phrase intangible and infinitely divisible moves from a curious statement to a revealing one.
The other considerations in the licence include sub-licensing – might the licensee sublicense? A handy right if the licensee has the territory of Canada, but only want to focus on Ontario or the Prairies. It would then want to sub-license the non-focus parts of its territory.
Similarly there is the issue of the assignment. Perhaps neither the licensor nor licensee care if either assigns the license. Then again if the licence negotiation resulted in idiosyncratic terms tied either to the parties relationship or nature of the party, then an assignment is problematic.
Indemnities have become major considerations in licenses over the past thirty years or so. This is because of the increasing amount of tort litigation and consumer rights. An indemnity is in effect an insurance, albeit it is paid by one of the contracting parties. A common practice is that the licensor indemnifies the licensee concerning the IP / technology should it cause harm to someone The licensee indemnifies the licensor for anything the licensee makes and sells using the IP / technology should that product cause harm. Given tort and negligence awards, every indemnity is circumscribed by subject matter (no indirect or consequential damages) and amount (cap to three times annual royalties).
Reps and warrants are a substitute for due diligence and a means to direct due diligence. The key concern in a licence is who owns the property, no dangling or contingent third party rights, etc. However common sense is not good sense in this context. One must know the law. One does not rep and warrant a patent is valid. A patent is valid only after the courts have reviewed it an impeachment context and determined the patent is valid. In a license, the rep and warrant is that the patent is registered, and all maintenance fees are paid.
Then there are the license considerations idiosyncratic to the subject matter. In Canada business patents are concerned patentable subject matter, which is not the case in the US. However, the Canadian situation is pending before the Supreme Court of Canada. Consequently any business patent license arguably needs a right to terminate and reimbursement of royalties.
With tender fruits a royalty provision would have to make allowances both for tree mortality and crop failures. The former may not present a definitional issue, but the latter may.
Depending on the applicable IP statute, in any infringement action, the owner must be a party. The licence needs to contemplate who defends, who pays, who reaps the benefit.
If you have IP assets that need protecting or intellectual property that needs to be licensed we can help! Phone us at (416) 366-3538 or use the contact form on this page.
