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Tuesday, 17 November 2009

"The most happening times": so what about IP transactions?

The IPKat's friend Aaradhana Sadasivam (KhattarWong) has been pondering on the impact of the world at large upon the content of IP licences. She writes:

"We all have to agree that we are alive in the most happening times [The IPKat has not come across this term before but rather likes it and thinks he might start using it too ...].
Right: even the best of IP licences can be stumped by unforeseen post-contractual events ...

The occurrence of SARS, tsunamis, floods, land slides, storms, H1N1, earthquakes, and (let's not forget) shorter and sharper economic cycles has changed our lives for ever. These events have duly left their impressions on the relevant IP laws all over the world. IP laws were amended to deal with the natural calamities [Some, perhaps ...]. In addition, there have been escalated sensitivities to IP protection, close scrutiny of the provisions of compulsory licensing, parallel imports, use of IPs under national emergencies, use and abuse of monopolies etc. The changing landscape, coupled with this new attitude, has resulted in a lot of jurisdictional peculiarities added to the IP laws.

Therefore a number of questions arise: do these jurisdictional peculiarities find their way into transactional documents at all? Especially when some of the peculiarities could potentially affect the dynamics of transactions, and may even catch the parties involved completely unaware and cause them loss. If jurisdictional peculiarities are not taken into account, then why are they not taken into account? What could be the reasons? How often do the parties affected end up in courts becuase of the omissions of jurisdictional peculiarities in their transactional documents? Is there any relevant caselaw? Or are the elements are covered elsewhere? I would really love to hear readers' experiences".
So would I, says the IPKat. Please post your comments below and/or send them to Aaradhana here.


chan said...

No experiences to share but I can't help but imagine Nassim Nicholas Taleb wagging his fingers and saying "I told you so" when the next calamity strikes us (and our IP transactions).

Mark Anderson said...

Jurisdictional peculiarity is a great phrase. Echoes of Churchill's terminological inexactitude.

I need to translate this question into simple terms before I can answer it. Do parties take account of local laws in the territories of their licence when drafting and negotiating the licence agreement?

Well, it all depends... All commercial activity involves risk. The risk-taker (commercial executive representing his company) sometimes takes account of risks associated with local laws, if the risk seems high enough. Probably more likely to be taken into account if it affects the enforceability of the agreement (eg competition laws) or if major risk has been identified (I recall past laws in Brazil about making source code freely available after 5 years). Also depends partly on how much legal advice is taken (eg should he take local advice in every country of a worldwide licence?)

Some obvious licence agreement clauses that deal with some of the examples given are:
1. severance clause re competition laws
2. force majeure clause
3. early termination clause (eg if loss of regulatory approval)
4. drafting the grant clause and obligations on licensee's customers etc in light of case law (eg UK and US) on exhaustion of rights, implied licences and non-derogation from grant.

Anonymous said...

Thank you, Mr. Anderson, and how about merger and acquisition documents?

Aaradhana said...

I would like to draw attention to a recent post at patently-o

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