This is Part 5 of a 8 step series on how SME’s can strategically manage IP during economic events: Contractual needs
Joint Development, in-licencing, and out-licensing impacts
For internal IP positions under review, there needs to be consideration for any overlap or interaction with business rights and restrictions already agreed to. IP leaders should seek to answer “What are both our businesses and our partner’s contractual obligations with respect to IP? What heightened risks or opportunities does this raise for our business?”
In practice there are at many types of contracts to prioritize considering, including licensing agreements and joint development agreements. Key points to review may be as follows:
- Requirements on IP maintenance & enforce the IP against infringers – Will the licensor / licensee continue this to keep the contract valid if they are under financial pressure as well? Will divesting or non-payment of maintenance fees impact agreements?
- Requirements on licence scope – will shifts in the market change need for Licensed Product scope on a geography basis? If major market shifts (or contractions) have happened, does a new contract need negotiated to either reduce costs or take advantage of different markets?
- Patent rights & control – is there first right of transfer for patents from one party to another if the first party opts to abandon or not patent a novel technology? Which party has responsibility for continued prosecution, defense, and maintenance of rights and what terms will trigger a transfer of control? This may be seen more often in joint development agreements.
As one may see, adjustment to IP rights (divest, abandonment, or even portfolio-repositioning) has the ability to impact pre-existing contractual rights and restrictions in various aspects of businesses they support – and likewise, IP leaders need to understand current business obligations required by 3rd parties they being supported or serviced by.
A useful patent strategy still needs to have real market applicable patents that can be used to at least defend, license, or enforce. In-prosecution repositioning will build on the IP Audit (Step 1) and budgeting (Step 2) outcomes. When mixed with IP operational updates (Step 3) while building a business relevant portfolio (Step 4), it will will ensure contractual reviews can be properly assessed to ensure (and anticipate) any business opportunities or risks that may occur during a companies or vendors response to large economic challenges.
Up next in Part 6, leveraging outside expertise for additional strategic benefits.