What should I consider when agreeing a licence covering a European patent or a Unitary Patent?

Parties agreeing licences covering either a traditional European patent (that has been validated in various member states of the European Patent Convention) or a Unitary Patent should consider how to avoid the danger of one party locking the other into a path it doesn’t wish to go down. This will mean agreeing solutions (inter alia) to the following issues:

  • Is the licensee to be responsible for patent prosecution?• Is the licensee to be given the right to decide on whether to validate the European patent in the currently usual way (i.e. by validating in a number of member states individually) or as a Unitary Patent?
  • Is the licensee to be given the right to opt out?
  • Should opting in or opting out be the default position?
  • Opted out patents can be opted back into the UPC. Which mechanism is to be used for withdrawing the opt-out? Who is responsible for implementing it? 
  • If the licensee is given the right to decide on the way in which the patent is validated or given the right to opt out, should the licensee be obliged to at least consult the licensor?
  • Should the decision on the way in which the patent is validated or on opting out be a decision made jointly by the licensor and licensee? If so, which fall-back positions are appropriate should the parties not agree?
  • If a party to a licence has the right to exercise the opt-out to avoid the risk of the patent in question being revoked at the UPC, should it be able to do so without the other party’s consent, given that that other party may not want to take proceedings in the national courts?
  • Who will pay for ancillary expenses associated with opting out?
  • Who will pay for defending against invalidity attacks in national courts following opt out, given that the cost associated with multiple invalidity defences is likely to exceed the cost of single proceedings at the Unified Patent Court?
  • If one party has the right to make any of these decisions should the other have the right to veto it under defined circumstances?An exclusive licensee may want the right to make any of the above decision autonomously. In this case the licence should be drafted so as to ensure that the licensor is obliged to supply all necessary assistance and cooperation.

It will be appreciated that the situation is further complicated if there is more than one licensee. One licensee may wish to commence infringement proceedings in the national court (because for example the legal regime there is favourable or because the licensee will be in its home territory) but the others may prefer the UPC route. 

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