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Appendix A : Checklist for International Licensing (Part 1)

This License Checklist is based in part on the LES Patent
License Checklist and the LES Health Committee Checklist

1. PARTIES AND BACKGROUND

1.1 Parties

a. Identification
b. Capacity or corporate authority, names and
addresses
c. Partnership titles, names and addresses of
partners
d. Legal capacity of foreign firms

1.2 Effective Date of Agreement or Reference Date

1.3 Place Where Agreement is Made

1.4 Background/Recitals

a. Licensed subject matter
b. Prior relationship between parties
c. What each party will contribute
d. Statement of expectations

2. DEFINITIONS

a. Accounting Year
b. Affiliate
c. Agreed Territory
d. Associate
e. Agreement
f. Acceptance Tests
g. Basic Technology
h. Components
i. Control
j. Confidential Information
k. Development
l. Documentation
m. Equipment
n. Exclusive Territory
o. Existing Process
p. Effective Date
q. Field of Use of Activity
r. Force Majeure
s. Improvement
t. License
u. Licensee
v. Licensor
w. Letter of Credit
x. Major Improvement
y. Minor Improvement
z. Maximum Liquidated Damages
aa. Material Breach
bb. Net Selling Price
cc. New Process
dd. Non-Exclusive Territory
ee. Notice Period
ff. Party, Parties & Parties Hereto
gg. Patent(s)
hh. Plant
ii. Process
jj. Product
kk. Performance Guarantees
ll. Standard of Quality
mm. Start-Up Date
nn. Subsidiary
oo. Technical Information
pp. Technical Services and Assistance
qq. Third Person
rr. Trademarks
ss. Territory
tt. Technology
uu. Tribunal
vv. Year

3. GRANT OF RIGHTS

3.1 Subject Matter of

a. patents
b. trademark
c. copyright
d. industrial design
e. chip design
f. know-how
f. trade secret

3.2 Exclusivity

a. exclusive

i. first refusal for other exclusive territories
ii. duration of first refusal right
iii. matching offers of third party ("hard" first
refusal)
iv. matching offer of Licensor before third party
offers solicited ("soft" first refusal)

b. non-exclusive

3.3 Scope of Grant

a. Make
b. Use
c. Sell
d. Dispose
e. Copy
f. Modify
g. Distribute
h. Display
i. Bundle

3.4 Field of Use

a. Limited uses
b. Solely in specified combination
c. Style or size of product
d. Sale or use limited to prescribed customers
e. Sale or use through specified trade channels

3.5 Quantity Limitations

a. Maximum

i. Fixed number
ii. Percent of industry sales
iii. Percent of Licensor's sales

3.6 Price Limitations

3.7 Tying Arrangements

3.8 Territory

a. Exclusive
b. Limited exclusive
c. Non-exclusive

3.9 Transferability

a. Non-transferable
b. Transferable
c. Transferable to Affiliates

3.10 Additional Grants

a. Affiliates - different locations
b. Replacement (for equipment specific license)
c. Relocation (for site license)

3.11 Most Favorable Terms & Conditions

a. Scope of clause

i. All terms generally
ii. Royalty terms only

b. Application of more favorable terms

i. Automatically
ii. At Licensee's option

c. Original Licensee entitled to

i. Notification of later license
ii. Copy of later license

3.12 Special Aspects Concerning Patents

a. Maintenance in force of patent
b. Duty to pay renewal fees
c. Option of Licensee to acquire patents

3.13 Where Licensed Patent Invalid

a. Right to terminate
b. Effect on royalty payments
c. Liability of Licensor to Licensee

i. Limited to duty to cooperate
ii. Arbitrary amount (e.g. not exceeding license
fee)
iii. Not in excess of compensation received from
Licensee

3.14 Sublicenses

a. Prohibited
b. Permitted

i. Affiliates

A. So long as deals as if at arm's length
B. Royalties guaranteed by Licensee
C. Compliance guaranteed by Licensee
D. Sharing of royalties

(1) Lump sum payments
(2) Running royalties

E. Reporting of sublicense being granted
F. Form of sublicense
G. Effect of termination of license

(1) Termination of sublicense
(2) Right of Licensor to assume
sublicense
(3) Obligation of Licensor to assume
sublicense

3.15 Improvements

a. Definitions of "improvement"
b. By Licensor - Licensor to Licensee

i. Inclusion in license

A. Automatic
B. At option of Licensee
C. At option of Licensor

ii. Exclusive

A. Royalty free
B. Compensation

iii. Non-Exclusive

A. Royalty free
B. Compensation

iv. Except out Improvements made under special
contract to third parties

c. By Licensee - "Grantback" license to Licensor

i. Exclusive

A. Royalty free
B. Compensation

ii. Non-Exclusive

A. Royalty free
B. Compensation

d. Sublicense of Improvements

i. By parties jointly
ii. Joint ownership maintained

e. Allocation of patent prosecution expenses
f. Improvements developed by other licensee
g. Related matters
h. Invention agreements with key employees
i. Duration of license re Improvements

4. SPECIAL ASPECTS CONCERNING PATENTS

4.1 Patent Marking

a. Form of notice

i. As specified by statute
ii. As specified in agreement
iii. As specified by Licensor during term of
agreement

b. Position of notice on products

4.2 Prosecution of Licensed Application

a. Responsibility for prosecution

i. Direction of prosecution
ii. Expenses of prosecution

b. Effect of non-allowance of claims on royalty
payments

4.3 Foreign Exploitation by Licensee

a. License under foreign patents

i. Responsibility for patent costs
ii. Sublicensing rights

b. Authority to export
c. Prohibition of exports

4.4 Option to Purchase Patent

a. Outright option
b. First right to purchase

5. SPECIAL ASPECTS CONCERNING TRADE SECRETS

5.1 Furnishing of Information

5.2 Technical Information

a. Specifications
b. Delivery
c. Form, language and system of measurement
d. Produced by third parties
e. Missing information

5.3 Quality Control

5.4 Trademark Notifications

6. SPECIAL ASPECTS CONCERNING CONFIDENTIAL INFORMATION

6.1 Definition of "Confidential Information"

6.2 Duration of Obligation

6.3 Exceptions - Permitted Disclosure

a. Public domain
b. Developed independently
c. Acquired from third party
d. In Licensee's possession
e. Government authorities
f. Court and arbitration proceedings
g. Auditors
h. Bankers
i. Joint Ventures

6.4 Duties of Care

6.5 Restrictions on Use

6.6 Disclosure to Employees and others having a
"need-to-know"

6.7 Disclosure to Subsidiaries, Affiliates or Associates
and Approved Research Institutions

6.8 Disclosure to Subcontractors

6.9 Disclosure to Promote Sale

6.10 Previous Agreements

6.11 Indemnification for Breach

6.12 Injunction to Restrain Breach

6.13 Return on Termination of License to Use Confidential
Information

7. SPECIAL ASPECTS CONCERNING COPYRIGHT

7.1 Ownership

a. Employees
b. Independent contractors
c. Assignment for purposes of publication

7.2 Moral Rights

8. SPECIAL ASPECTS CONCERNING TRADEMARKS

8.1 Form and Method of Use of Trademark

8.2 Associated and Combined Trademarks

8.3 Registration

a. Registered user agreements

8.4 Quality Controls Over Licensee's Production

9. KNOW-HOW AND TECHNICAL ASSISTANCE

9.1 Furnishing of Information

a. Present; future
b. Written material only
c. Only information Licensor has right to divulge
d. Maintenance of secrecy

i. Restrictions on use
ii. Agreements with employees/contractors
iii. Indemnification for breach

e. Termination of license

i. Return of tangible material
ii. Continuance of secrecy

10. TECHNICAL SERVICES AND ASSISTANCE

10.1 Training of Licensee's Personnel

a. At Licensor's plant site
b. At Licensee's plant site

10.2 Training Personnel - Licensor

a. Number

10.3 Trainees - Licensee

a. Number & qualifications
b. How chosen
c. Substitutions for unsatisfactory trainees
d. Accreditation of training

10.4 Duration of Training

10.5 Language of Training Seminars

10.6 Living & Working Conditions for Licensor's Personnel in
Licensee's Country

a. Living conditions for Licensor's/Licensee's
Personnel
b. Costs
c. Safe departure, etc.
d. Working conditions at Licensee's plant site
e. Phone and fax, etc.
f. Hours of work
g. Holidays
h. Access to site and all relevant data

10.7 Other Services

a. Design and engineering services
b. Technological consulting services
c. Repairs and maintenance services
d. Marketing and commercial services
e. Planning research and development service
f. Additional services
g. Changes in services
h. Fees for services
i. Furnishing advisory services

i. Time limitations
ii. Compensation for Licensor

j. Responsibility for damages and injuries by acts of
Licensor
k. Employment of Licensor or retention as consultant

11. SUPPLY OF RAW MATERIALS, COMPONENTS, SPARE PARTS,
EQUIPMENT, ETC.

11.1 Purchase of Equipment from Licensor

11.2 Option to Purchase

a. From Licensee
b. From Licensor

11.3 Purchase in Licensee's Country

11.4 Assurances of Source of Supply

a. Stated preference
b. Favored nation
c. Non-Discrimination
d. Purchase from alternative sources

11.5 Quality of Materials

11.6 Price

a. Market price
b. Price Licensor sells to other licensees
c. No less favorable, etc.

11.7 Exclusion of Items from Contract Price in Licensing
Agreement

11.8 Delivery of Equipment

a. Dates and effect of delay
b. Manner of shipment
c. Responsibilities of Licensor
d. Responsibilities of Licensee
e. Passage of title
f. Assignment of warranty
g. Confirmation of delivery
h. Payment dependent upon receipt of confirmation
i. Risk

12. EXPLOITATION OF LICENSED TECHNOLOGY

12.1 Duty to Exploit

a. Fill demand only
b. Create demand also
c. Payment of minimum royalty as satisfaction of duty

12.2 Specific Obligations

a. Production facilities

i. Time of completion
ii. Capacity

b. Production and sales

i. Time of commencement
ii. Product standards
iii. Minimum units

c. Advertising

i. Approval by Licensor
ii. Minimum budget

d. Servicing

i. Facilities
ii. Repair parts

12.3 Remedy for Default

a. Cancellation of exclusiveness
b. Termination of agreement

12.4 Exchange of Commercial Information

12.5 Loss of Exclusivity or if fail to exploit

13. THE MARKETING PHASE

13.1 Patent and Copyright

a. Form of notice
b. Indication of place, manufacture, etc.
c. Position of notice on products

13.2 Quality Control

13.3 Product Labeling and Promotional Activities

13.4 Advertising and Other Promotional Material

13.5 Distribution Channels

a. At request of Licensor
b. More favorable prices
c. Price and other resale terms

13.6 Legal Effect of Limitations on Pricing and other Resale
Terms (e.g. anti-trust laws)

14. MANAGEMENT SERVICES

14.1 Services to be Provided

14.2 Fees for Services

15. MONETARY CONSIDERATIONS

15.1 General Problems

a. Unreasonable payments
b. Discriminatory payments
c. Post-Termination payments

15.2 Fixed Sum

a. Lump sum

i. On execution
ii. After milestone is achieved

b. Fixed periodic payments

i. Interest on overdue payments
ii. Acceleration on default

c. Credit against future royalties

15.3 Fixed Sum Payment in Lieu of Royalties

15.4 Fixed Sum Combined with Royalties

15.5 Royalties for different Components of Licensed
Technologies - Separate Pricing or Pricing as a Whole

a. Patent
b. Trade Marks
c. Copyright
d. Trade Secrets

15.6 Variable Consideration

a. Rate

i. Flat sum per unit
ii. Flat percentage of gross or net sales
iii. Rate decreases or increases with increasing
sales
iv. Differential
v. Temporarily low
vi. Flat sum per year
vii. Flat sum for paid-up license
viii. Dollar amount ceiling on annual payments
ix. Dollar amount ceiling on aggregate payment
x. Lower royalties if Licensee opts to make a
lump sum payment
xi. Annual or aggregate dollar amount ceiling on
royalties to apply if Licensee opts to make a
lump sum payment
xii. Payment until a certain number of units are
sold, then an increase or decrease in initial
rate(or a fully-paid license)

b. Base

i. Number of units

A. Manufactured, sold or processed
B. All units or patented only
C. Definition of "sold"
D. One payment per unit

ii. Supplies or raw materials used

A. Volume basis
B. Cost basis

iii. Use Compensation received by Licensee
iv. Net sales of Licensee

A. All articles or patented only
B. Definition of "sold"
C. Definition of "net sales"
D. Effect of credit losses
E. Sales to affiliates
v. Profits of Licensee

15.7 Royalties for combination products

a. Any royalty relief
b. Simple algebraic reduction
c. Subject to floor rate

15.8 Royalties to continue past patent expiry during period
of regulatory exclusivity

15.9 Nationality of parties

a. Foreign Licensee/sublicensee to be responsible for
withholding taxes
b. Licensee to pay all royalties at full rate
regardless of where the "sales" take place
c. Licensee to provide Licensor certificate for
withholding tax paid

15.10 Royalty Payment

a. Payment mandatory

i. In advance of each royalty period
ii. At end of each royalty period

b. Payment optional

i. To retain exclusiveness
ii. To maintain license

c. In satisfaction of duty to exploit
d. Carry over of payments from one period to another

15.11 Related Matters

a. Allowance for royalties payable to others
b. Exemption on sales to other Licensees
c. Interest on overdue payments
d. Effect of termination on obligation to pay accrued
royalties

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		Created: 2003-02-13 Updated: 2004-11-05	Top of Page	Important Notices