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Strong patent protection is essential for a start-up biotechnology company and can be a valuable company asset. However, it is also expensive, with costs ranging from tens to hundreds of thousands of dollars over time. This session will focus on how to get the most out of your patent dollars. This session presentation is available in audio format here: http://www.marsdd.com/bioent/dec4
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MaRS Event Series,BioEntrepreneurship-IntellectualProperty Strategy
Ownership and Inventorship Issues
•Anita Nador, Partner, McCarthy Tétrault LLP
•December 4, 2006
What Will We Cover?
1. Intellectual Property (IP)Ownership
2. Inventorship (Patents)
3. Best Practices
Intellectual Property
• Patents
• Trade-Secrets/Know-how
• Copyright (incl. moral rights waiver)
• Trade-marks (incl. good will)
• Others
Why Is Ownership Important?
• Want to make sure you have anasset that you can:
• Use
• Sell
• License
• Enforce against third parties
• Otherwise extract value from (e.g.attract investors)
Why is it Important?
! Ownership or license right is fundamental to
any IP Agreement or financing.
! Minimal IP due diligence is to verify
ownership/license rights.
How Do You Gain The Right To IP?
! You created it (e.g., for patents - inventor or
employer engaging other!s to create).
! An assignment gives you all of the legal title
and right and interest in the IP.
! In a license, the IP owner retains the legal
title, but leases all or part of the intellectual
property right to you.
Creation - Inventorship
• For Patents, inventor is first ownerunless there is an agreement orrelationship to indicate otherwise.
• Inventions developed “during thecourse of employment” are generallyconsidered to be owned by theemployer.
Inventorship
• In the steps leading from conception topatentability, the inventor(s) may utilizethe services of others, who may be highlyskilled, but those others will not beco!inventors unless they participated inthe inventive concept as opposed to itsverification.
• Apotex Inc. v. Wellcome Foundation Ltd.,[2002] 4 S.C.R. 153
IP Inventorship/Ownership
! Inventorship is distinct from ownership.
! Inventorship is distinct from authorship.
! Inventorship not determined by contract. It isgoverned by patent law of each jurisdiction.
! Ownership can be determined by contract.
Beware of Joint/Co-Ownership Provisions
Canada! Cannot dilute “quid” of
other co-owner.
! Each co-owner can work theinvention themselves andcan assign their entire rightto one other but cannotlicense right or assign tomore than one assigneewithout consent of other co-owner or accounting toother co-owner.
! Forget v. Specialty Tools ofCanada Inc. (1992), 48C.P.R.(3d) 323, aff’d(1995), 62C.P.R. (3d) 537 (B.C.C.A.)
United States! Can dilute “quid “of other co-
owner.
! Each co-owner can licenseright or assign to more thanone assignee withoutconsent of other co-owneror accounting to other co-owner.
! Absent agreement tocontrary, all co-owners mustbe party (plaintiff) toinfringement suit
! Ethicon Inc. v. United StatesSurgical Corporation 135 F.3d 1456 (Fed. Cir. 1998) 35USC 262.
IP Due Diligence - Ownership
• Identify all parties involved with orhaving access to business/IPdevelopment.
• Make sure you have agreements andprocedures in place outlining theirobligations to you.
• EE, Confidentiality, Collaboration,Assignment, License Agreements.
3rd Party
Collaborators
University Policies
Students/Post-Docs
TechniciansUniversity Collaborations
Funding Source
Academic Lab
(PI)
Academic Lab
Company
Funding Source
(3rd Party)
EEs
(i) Consultants
(ii) 3rd Party
Collaborations(iii) Suppliers
(iv) Distributors
Funding Source (Co.)
Company
IP Due Diligence - Ownership
! Check Title and Prior/Future Obligations andEncumbrances:
" Assignments/Title on record in patentoffices
" Employee/contactor agreements
" Funding Sources
" Collaborations/licenses
" Encumbrances: Liens/Securities
" Ongoing IP Practices (CDAs, InventionDisclosures, Security Procedures)
Major Points That Will Be Considered WhenReviewing Agreements
#$Field & Scope(Ownership/License/CDA)
2. Termination provisions:
Termination triggers (licenses,CDAs)
Contract termination proceduresand survival clauses (EE, CDAs,licenses)
1. Field & Scope
! Sole
! Exclusive
! Non-Exclusive
! Territory
! Subject Matter
2. Termination
! Triggers! Representations and warranties! Deliverables / milestones! Bankruptcy
! Events upon termination
2. TerminationEvents Upon Termination
! Return of all IP rights
! Return of all material / confidential information
! Cease and desist activities
! Final reports, payments, other deliverables
! Survival provisions (e.g. confidentiality)
Components of IP Provisions of EEAgreements
• Grant Clause• Consideration• May have description of Employment.• Confidentiality Clause• Representation that EE not using prior
employers IP or other IP in contraventionof ongoing prior obligation.
• Termination and Survival Clauses:Ongoing obligation regardingConfidentiality and Not Use Your IP forbenefit of future ERs without consent.
Confidentiality Agreements
• Definition of Confidential Information
• Duty to maintain information inconfidence
• Limited generally acceptedexclusions
• Optional publication clause (ifdealing with academic institution,likely required. For company EEs, donot provide publication clause).
Best Practices
• Implementation of Internal IPManagement Systems
• Inventory of IP Assets (current and potentialfuture IP)
• Adoption of internal IP practices to identifyand maintain control over IP:• Security Procedures
• Confidentiality
• Assignments/Licenses
Best Practices
• Inventory and monitoring of 3rd partiesCompany/Academic Lab is involvedwith:• Education
• Communication
• Compliance
• Internal Database:• Diarize action point due dates
• Sort by type of agreements/parties
• Contact people (internal/external)
THANK YOU!