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))