(Numbers) and IP Licensing Agreements

by Raymond Millien on January 22, 2012

During the course of my practice, I am continually amazed at the contents of IP and technology-related agreements I receive from opposing counsel who happen to be “good” lawyers at “good” firms.  While not getting into all the “strange,” “sloppy,” or downright “wrong” legal verbiage I see, I do have one thing that has been bothering me lately.  What’s that, you ask?  Well, it’s the use of numbers and those silly parentheticals.

I am sure all of you have seen language in agreements such as:

  • “In consideration of the license rights granted herein by Licensor to Licensee, Licensee shall pay to Licensee a one time, up-front, non-refundable license fee of one million United States dollars (US$2,000,000.00).”
  • “In consideration of the license rights granted herein by Licensor to Licensee, Licensee shall pay a flat royalty based on two and one-half percent (2.0%) of Gross Revenues received from the sale of Licensed Products.”
  • “Licensee shall pay any deficiency, plus interest thereon from the date each payment was due, within thirty (20) days of the date of any notice of such discrepancy.”

Now, for those of you paying attention, you will notice that the spelled out numbers do not match the digits appearing in parentheticals.  Why do attorneys do this?  What class in law school do they teach this? I’m told this is a practice that dates back to the days of carbon copies and “old school” telefax machines, where parties needed two chances to be able to discern the figures in legal documents.  But, in today’s world of TrueType fonts and portable document formats, why continue this practice?  Which number governs if after reviewing a twenty (20) page license agreement, both sets of lawyers and clients did not catch the discrepancy!?  (Wasn’t that “twenty (20)” annoying!?)  Well, different jurisdictions have different rules of contract construction!  Why leave it to chance?  Do people realize that over the course of an already complex IP agreement, such practice may add one or more pages to the document’s length!?

 So, for everyone’s sake, I propose the following simple rule:  If the number is from zero to nine, write it out in words, else write it in Arabic digits!  If it works for college essays, it should work for IP agreements (and all other contracts) too!

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SMEs Take Note: A Few World IP Statistics

by Raymond Millien on December 21, 2011

As I have often pointed out on this Blog, small- and medium-sized enterprises (SMEs) that overlook their intellectual property assets (i.e.,“IP” or patents, copyrights, trademarks and trade secrets) do so at their own peril.  As IP accounts for a vast majority of SMEs’ value, the key to their exit strategy – be it an IPO or sale – is the IP that they control or potentially control.

Last month, the World Intellectual Property Organization (WIPO) released its annual report of IP statistics from around the world.  While there is most certainly a dizzying amount of data, I’ve taken the liberty to provide a snapshot of such data to help SMEs (and those who counsel them) understand what is happening in the world around them.  This should help in making long-term, non-myopic IP management decisions.

With over 3 million worldwide applications in 2009, trademark protection is the most sought after form of IP protection in the world.  That is, trademark applications represent the highest percentage of overall IP protection applications, apart from a few exceptions such as the IP offices of Japan, the Republic of Korea, and U.S.  where patent applications make up the largest share.

Globally, residents file the majority of their IP applications at their respective IP offices.  This reflects a preference for seeking protection within respective domestic markets.  For example, 42.7% of global patent applications were filed abroad.  This shows that patent applicants have a greater appetite for seeking international protection for this form of IP than for any other form of IP rights.  By contrast, only 25% of total trademark applications are filed by applicants outside their country.

With respect to patent filings abroad in 2009, applicants choose the Patent Cooperation Treaty National Phase Entry route 53.4% of the time, versus directly filing in a foreign jurisdiction.

The world’s top 10 IP offices accounted for approximately 87% of total patent applications filed globally, with the top 3 – the U.S., Japan and China – filing about 60% of the total. Together, the top 20 offices filed 94% of all patent applications.

Between 2008 and 2009, of the top 3 offices, there was a 10.8% decrease in the number of patent applications filed in Japan, while the U.S. remained practically unchanged and China saw an 8.5% increase in the number of applications.

In 2009, one quarter of all trademark applications were filed at the Chinese Trademark Office. When combined with the shares held by India, Korea and Japan, these four Asian offices accounted for 37% of world’s total number of trademark applications.

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Large Patent Portfolios for Sale: $510,204.08 Each!!!

December 14, 2011

As start-ups and small- and medium-sized enterprises (SMEs) begin to realize that IP accounts for a vast majority of their value and key to their exit strategy, large companies begin to use IP as a driver for strategic business decision making, and investors begin to realize that IP is an asset class capable of producing [...]

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What Some Think of Patents

November 30, 2011

I recently came across the following blog post, and while it is a bit simplistic and ignores the basic fact that a strong patent system fuels innovation, it does show how some in the tech world feel about patents.  So, enjoy!

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Covenants, Representations, and Warranties: Some “Contracts 101” for IP/Software/Tech Agreements

November 20, 2011

Recently, it has struck me that many business folks who “negotiate tons of IP, Software and Technology agreements” fail to understand the difference between covenants, representations and warranties that are “standard” in many such agreements.  Not surprising.  What is surprising is that many of their lawyers fail to appreciate the difference as well!  So, for [...]

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President Obama Signs Patent Reform Bill into Law

September 16, 2011

Today, President Obama fulfilled his promise to sign the Leahy-Smith America Invents Act, passed by the U.S. Senate on September 8, 2011, and the House of Representatives on June 23, 2011.  Thus, effective on September 26, 2011, the first effect of the law will be felt:  a 15-percent surcharge will be added to all USPTO [...]

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Congress Passes Patent Reform: Highlights for Small- and Medium-Sized Enterprises

September 11, 2011

“This is not a patent reform bill.  This is a big corporation patent giveaway that tramples on the rights of small inventors.” – Senator Maria Cantwell (D-WA) On September 8, 2011, The U.S. Senate voted to adopt the June 23, 2011, House of Representative’s version of the Leahy-Smith America Invents Act, advancing it to President Obama’s desk, who [...]

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U.S. IP Brokers: No Ethical Regulations and No Standards

September 6, 2011

It has now been three years since an article entitled “Meet the Middlemen” was authored by Ron Laurie and me, and published in the February/March 2008 issue of Intellectual Asset Management (IAM) Magazine.  In that often-cited article, Ron and I presented a new taxonomy comprised of seventeen IP business models in the United States IP [...]

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Patent Cooperation Truly: Moving Towards a True International Patent?

August 25, 2011

I have previously advised on this blog site that over-filing for foreign patent rights is one of the top five IP-related mistakes made by small and medium-sized businesses (SMEs).  This is because patents are jurisdictional in nature. You cannot enforce an issued U.S. patent in, for example, the UK. Conversely, you cannot enforce an issued [...]

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The 2011 G8 Summit and Intellectual Property

May 31, 2011

The leaders from eight of the world’s richest industrialized countries (commonly known as the “Group of Eight” or “G8”) – Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States – met in Deauville, France from May 27-28, 2011.  This forum, which traditionally discusses issues of mutual or global concern, was the [...]

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