2022-03-05 Enforcement, Agreement Basics and Licensing (Student)

Alice Yuen-Ting Wong, Ph.D.
5 March 2022
BBMS6300/LSCI5463/BCHE4070
Overview
• Freedom to Operate
• Enforcement and Infringement
• Technology Transfer
• Basics in Agreement/Contract
• Common Agreements in Biotech
• Key Terms in License Agreement
© 2022 Alice Wong 2

Freedom to Operate

I Got the Patent - Happily Ever After?
Can I exclusively and freely practice my invention till my patent expires?
Procurement Enforcement
Freedom to
operate

Freedom to Operate
“I have a patent but why can’t I use it”
• Patent is NOT a positive right but a right to exclude.

• A patented invention ≠ Free of infringement problems.
• Freedom to operate (FTO)
• Whether an activity can be done without infringing IP rights of a third party?
• Any valid IPs covering the components or activities essential for practicing your invention in a
particular country ?
• Patent – iPSC
• License (permission to use)
• Modify commercial embodiments
• Challenge patent validity or enforceability

Enforcement of IPRs – Who & How?
• Marking
• Patent No.
• Symbols , ®, ©
Procurement Enforcement
• Use
• Trademark - commercial use
• Patent - compulsory license Freedom to
operate
• Self police & proactive defense

• Infringement
• Theft of trade secret

Patents – Negative Right & Subject to Challenges
• Freedom to operate
• Whether an activity can be done without infringing IP rights of
third parties?
• Invalidity & Revocation

• Post-grant challenges on ground of unpatentability
• Unenforceability
• Inequitable conduct (fraud on the U.S. patent office)
e.g. False inventorship, not submitting references that affect novelty/obviousness
• Patent misuse

Patents Valid & Enforceable But No Infringement
• Poor claims
• Exempted uses
1. Prior use exemption 先用權
• A safe harbor to one who independently developed and uses a
patented invention commercially before a prescribed time –
exempted from patent infringement
• HK/China – before the effective filing date;
• U.S. – at least 1 year before the effective filing date, or the date of
public disclosure
2. Private and/or non-commercial use
3. Experimental use and/or scientific research
4. For the purpose of seeking regulatory approval for a drug
• First-sale doctrine/Patent exhaustion

Patent Infringement

How to Establish Patent Infringement?
A composition comprising L-lysine and L-glutamine.
• Product A: L-lysine, L-glutamine and L-serine.
• Product B: L-lysine and S-glutamine.
• Scope of claims as interpreted in light of specification & arguments

during prosecution.
A) Literal Infringement 字面侵權

• Each and every element (“read-on” the claims)
B) Doctrine of Equivalence 等同侵權

• Not exactly the same as the patented invention
• Element(s) are substantially equivalent & interchangeable
• Triple-identity test
- Performs substantially the same function
- In substantially the same way
- Accomplish substantially the same result

Direct vs Indirect Infringement
• Indirect
• Not make, sell, offer for sale, use or import the patented invention
• Contribute to, or induce direct infringement
(A) Contributory (sale of non-staples)

theweeklypencil.com
e.g. Selling an eraser nub that has no other use other than for the production of
a patented pencil
(B) Induced (induce someone to directly infringe)

e.g. Asking someone to buy the eraser nub and make the patented pencil;
e.g. Selling the ingredients with detailed instructions on how to make a patented
device

Resolutions & Remedies
• Dispute resolutions
• Litigation (takes years, $$)
• Arbitration (faster, confidential)
• Mediation (~negotiation, parties’ interest > legal position)
• Remedies of infringement
• Equitable relief, e.g. injunctions
• Monetary relief, e.g. damages for loss

Technology Transfer

IP Commercialization
• Considerations
• Resources – infrastructure, money, manpower
• Competency and experience
• Risks – regulatory approval, scale up
• Potential returns – value of the product, market niche
• Common models
• Developing and selling your own products in existing company
• Start-up company
• Joint venture (pool of funds and/or technology)
• Licensing IP
• Selling IP (maybe together with the business)

Technology Transfer
• Transfer a technology from one to another for utilization & further
development
• Agreement/contract to define rights and obligations

Industry
• Common instruments in Biotech

• Assignment
• License
• Material transfer agreement (MTA)
• Non-disclosure agreement (NDA) Government Institution
• Sponsor research agreement
• Collaboration agreement

Agreement/Contract Basics

Basics in Contract
A: I will sell my car to you for $6,000.
B: Alright, I will buy your car for $6,000!
• Agreement (協議)
= A mutual understanding or arrangement between parties
• Written, verbal or by conduct
• Not legally enforceable
• Contract (合約)
= A legally enforceable agreement
• Offer, Acceptance, Contractual intent, & Consideration
• Unambiguous terms
• Legally competent parties under mutual consent
• Legality
• Look at substance not label

Formation of a Contract
1) Offer (要約)
- A promise to perform (or not perform) a duty requesting something in exchange
- Clear and definite terms (e.g. parties, subject matter, price)
- Clear intent to be contractually bound by the specified terms if they are accepted
2) Acceptance (接納)
- Accept the offer as provided (i.e., unconditionally)
- Communication of acceptance to offeror is generally required
- Once a party accepts à Agreement forms
3) Contractual intent (受法律約束的意圖)

- Mutual intention to create legal relationship (i.e., ready to be “legally bound”)
- Presumed in commercial agreements (vs family/social agreement)

4) Mutual Consideration (代價/對價)
• A promise in a contract must be supported by a consideration to be
enforceable
• Something of value in exchange for your promise made to the other party
e.g. right/benefit to one party, or forbearance/detriment to another
• For example,
• Party A – promise to clean B’s room for $100
Party B – promise to pay $100 for A’s cleaning service
• Party A – promise not to sue B for damaging her head for $5,000
Party B – promise to pay $5,000 for A’s promise (forbear from suing B)
• Consideration
• Mutually exchanged (one for another one) ≠ Gift
• Need not be equal in value
• Cannot be something already done or pre-existing duty
• Cannot be illusory or emotional – Promise to do something impossible/promise of
love?
$5 each
Offer & Acceptance
Offer
A: “I will sell you my car for $6,000. ”
B: “Alright, I will buy your car for $6,000.”
Acceptance
A: “I will sell you my car for $6,000. ”

B: “ I will buy it for $5,500. ”
A: “ Alright, deal! ” Acceptance??
A: “I will sell you my car for $6,000.”

B: “ Is it possible to pay by instalment?”
A: “ No.” Counter offer or Acceptance??

Shopping in Supermarket
Invitation to Treat (要約邀請)
à Invite others to make an offer
2. Customer picks up goods & goes to cashier

1. Goods displayed with price tags
3. Hands goods to the cashier
4. Cashier takes the money

http://www.123rf.com/
Offer vs Invitation to Treat??
• Display of goods for sale

• Request for tenders 招標
• Auction with reserve (i.e., with min. amount) 有底價拍賣
$5 each
“the properties will be sold to the highest bidder”

Advertisement – Offer or Invitation to Treat?

Leonard v. Pepsico, Inc., 88 F.Supp.2d 116 (S.D.N.Y. 1999),
210 F.3d 88 (2d Cir. 2000)
• PepsiCo’s Campaign - “Pepsi points” for “Pepsi items”.
• TV advertisement - a youth arriving at school in a Harrier Jet and said the Harrier
Jet needs 7,000,000 Pepsi points.
• Redemption form - “additional points could be purchased for ten cents each”.
• Leonard tried to obtain the Harrier Jet by sending 15 Pepsi points and a check
for $700,000 (= 7,000,000 Pepsi points). PepsiCo refused.
• District Court: No contract! The TV Commercial was merely an advertisement,

not an offer that would have been accepted by performing the requested act.
“If it is clear that an offer was not serious, then no offer has been made.”
“An obvious joke, of course, would not give rise to a contract.”
“In this case no objective reasonable person could have concluded that the
commercial constituted an offer for a Harrier jet.” (the jet costed >$23 million)

Revocation of an Offer
Anna: “I’d like to buy your paint for $500.”
Ben: “Certainly!”
Anna: “Do you take credit card?”
Ben: “No.”
Anna: “Oh, sorry, then I have no way to pay.”
Anna didn’t buy the paint finally. Did Anna breach the contract?
• An offer must be withdrawn before its acceptance.

• Also, the withdrawal must be communicated to the offeree before acceptance.

Validity of Contract
• Contract must be made under free will and voluntary act of
each party who is capable of contracting
• Invalid if
• Incapable to contract e.g. < legal age, mentally incapable, intoxicated (?)
• Unenforceable if made under unlawful circumstances, e.g.

Unconscionability (顯失公平)
Undue influence (不當影響)
Duress (威迫)
Fraud (欺詐)
Misrepresentation (不實陳述)

Binding (約束) & Breach of Contract (違約)
• A valid contract binds parties once it is formed. The promises, duties
and rights under the contract are recognized by the law.
• Breach of contract = fails to perform as required by the contract.
• The law will give a remedy if there is a breach of contract, e.g.

ü Compensation for damages, claimant must show
(i) the other party was in breach of a term of the contract, and
(ii) the breach caused a loss justifying the amount claimed
ü Specific performance (e.g. must deliver the goods as promised)
ü Rescission (i.e. repeal the contract)

Typical Elements of a Contract
• Subject matter
• Parties
• Mutual Consideration
• Purpose & Scope (Terms & Conditions)
• Confidentiality
• Effective Term, Termination & Amendment
• Economic Arrangements
• Liabilities & Warranties
• Dispute Resolutions
• Applicable Laws & Jurisdictions
• Legal signatures

Common Agreements in Biotech
• Assignment
• Non-Disclosure Agreement (NDA)
• Licensing Agreement
• Material Transfer Agreement (MTA)

Assignment

Assignment
• Permanent transfer of right from one (assignor) to another (assignee)
• One-off arrangement: Sign assignment – pay $ – right transfer
inventors.about.com
• Employment contract
• IP clause – employees assign rights in their creations to employers
• Confidentiality clause – prohibit employee from disclosure (invention, TS etc.)

Non Disclosure Agreement (NDA)

Non Disclosure Agreement (NDA)
• A confidentiality agreement in which the parties promise not to
disclose certain information to others without proper authorization.
• Unilateral (“Disclosing” v. “Receiving” party)

Bilateral (Two-way, both are disclosing something)
• Definition of confidential information
• Obligations of receiving party
• Period of time

Licensing Agreement

Licensing Agreement
• Owner (licensor) permits another (licensee) to use/make/sell an invention
• Ownership of right maintains
• Exclusive vs Non-exclusive
• Sub-licensing
http://www.memoori.com/the-importance-of-intellectual-property-ip-in-led-lighting/
Typical Elements in Patent Licensing
• Exclusivity & Right to Grant Sublicenses
• Field of Use (e.g. anti-cancer A vs anti-cancer B; Ab for lab use vs clinical use)
• Territory
• Payments
Ø Licensing fees (initial, lump sum)
Ø Royalties 使用費 (regular, lump sum, usage/sale-based)
Ø Milestone payments (reaching a defined development stage)
• Responsibility (e.g. who prosecutes and maintains IP; mutual assistance)
• Liabilities & Warranties
• Confidentiality
• Non-competition Clauses
• Applicable Laws & Jurisdictions
• Dispute Resolutions
• Term, Termination & Amendment
• Breach & Remedies © 2022 Alice Wong 36
Scope of Right
Licensor Licensee
• Limited to licensed patents • As broad as possible
e.g. U.S. Patent No. XXXXX and U.S. e.g. U.S. Patent No. XXXXX and U.S.
Patent No. XXXXX, and any Patent Patent No. XXXXX, and any Patent
issued upon Licensor's U.S. Patent issued upon Licensor's U.S. Patent
Application Serial No. XXXXX, filed Application Serial No. XXXXX, filed
XXXX. XXXX, including the information
contained in such applications,
with respect to the Invention(s),
any foreign patents corresponding
thereto, and/or any divisions,
continuations, continuations-in-
part, or reissues thereof.
• Know-how, show-how?

Coverage of Product
Licensor Licensee
• As broad as possible • Limited to licensed patents as

possible
e.g. Anything that infringes e.g. Products or parts

Licensed Patents but for the manufactured, sold, or
license distributed by licensee that are
produced by the claimed
inventions in the licensed
patents

Exclusivity and Further Development
• Exclusive or non-exclusive?
• Which territory?
• Which field of use? [Competitive?]
• What can the Licensee do with the licensed patent? e.g. making, using,
selling the licensed product [Further developing?]
• (Exclusive license) What the Licensor cannot do under the exclusive
license?
• Development and Milestones

• How to assure IP will work?
• How to assure IP will be utilized/manufactured?
• Mutual assistance?
• Progress/sale reports LICENSEE shall, during the term of this Agreement and
any renewal thereof, use its best efforts to research,
discover, develop and market the Licensed Products for
commercial sale and distribution throughout the Territory.

Economic Arrangement
• Advance Payment (one off)
• Payment to Licensor upon execution of the License Agreement
• Often non-refundable
• Royalty (regular, e.g. annual or bi-annual)

• Fixed amount
• Variable amount calculated based upon
1. Fixed price x No. of units sold; or
2. Fixed % x Gross sale or Net revenue
• Milestone Payment (conditional)

• Payment upon reaching a defined development stage

Liability & Warranty Clause
• Liability
• Limit or eliminate liability arising out of certain matters (e.g. use of licensed
product by third party).
• Insurance (保險)
• Buy & maintain insurance to cover claims for damages arising out of Licensee’s
business operations (e.g. property damage, personal injury).
• Indemnity (擔保賠償)
• An obligation to pay or compensate for the losses, damages, or liabilities incurred
by the licensor.
• Warranty (保證)
• Assurance to the other party that a fact, condition or quality is and will be true.
LICENSOR warrants to LICENSEE that LICENSOR is not aware that the invention infringes upon
any patent, but LICENSOR does not otherwise warrant or guarantee the validity of the Patent …

Termination & Willful Breach
• License terminates upon
• Expiration of the term (e.g. fixed no. of years, or patent term)
• One’s request – need prior notice and a reasonable period to cure
• Frustration of contract – performance impossible due to unforeseen event
• Breach of contract (on material aspect)
• Willful breach
By Licensor By Licensee
• Termination without cause • Refuse to pay royalty
• License same invention to a 3rd • Fail to pay royalty in full amount
party despite exclusive license • Fail to provide the required reports
• Fail to meet the specified milestones

Potential Issues in Patent Licensing
• Licensee improved the licensed technology
• Who owns the improvement? Need clear definition.
• Licensed patents are invalidated or held unenforceable

• Shall Licensee pay a lesser % or nothing?
• (Non-exclusive license) Upon infringement, Licensor has a sole

control of the defense and settlement negotiation
• What if Licensor fails, delays, or refuses to act?
• Licensee needs to seek Licensor’s prior consent before taking action to
enforce right/sue.

Material Transfer Agreement (MTA)

Lab A obtained a recombinant bacterium from a collaborator.
1. Can Lab A use the bacterium for commercial purpose?

2. Can Lab A modify the bacterium? Who shall own the respective IP right?
3. Can Lab A provide the bacterium to the neighboring laboratory?

Material Transfer Agreement (MTA)
A contract that governs the transfer of tangible research

materials between two organizations (academia/industry).
http://www.nature.com/nature/journal/v403/n6767/fu
ll/403236a0.html
e.g. Cell lines, bacteria

Transgenic animals, human tissues, plants
Plasmids, vectors
Reagents, chemicals
www.knowledgetransferireland.com

When do you need a MTA?
• The material
• can be easily replicated or reproduced.
• is the subject of a patent application.
• has been licensed for commercial use or sale.
• Define rights & responsibilities – Avoid misunderstanding/disputes

• Duties in using, handling, disposing the materials.
• Prevent uncontrolled distribution of materials.
• Clarify the rights to make derivatives from the material.
• Clarify IP rights arising from use of the material.
• Ensure that correct and appropriate acknowledgment is included in any
publications regarding the use of the materials.

Uniform Biological Materials Transfer Agreement (UBMTA)
• A master agreement for the general use in the exchange of biological

materials between organizations
• Simplify the administrative procedures
• Elements:
• Definitions
• Ownership/IP issues
• Limitation on use and distribution of materials
• Liability
• Confidentiality
• Limitation on publication
http://www.nih.gov/
http://www.autm.net/resources-surveys/material-transfer-agreements/uniform-biological-material-transfer-agreement/

Potential Issues in MTA
• Ownership of modifications and derivatives
• Material - include modifications and/or derivatives?
• Provider may claim ownership of recipient's work
• Prevention or delay of publication

• Provider may request recipient to keep information confidential à
preventing publication
• Provider may request a review period for the recipient's manuscripts,
abstracts or presentation materials à delaying publication

THANK YOU!
Email: alicewonginss@gmail.com

2022-03-05 Enforcement, Agreement Basics and Licensing (Student)

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

2022-03-05 Enforcement, Agreement Basics and Licensing (Student)

Uploaded by

Copyright:

Available Formats

Alice Yuen-Ting Wong, Ph.D.

© 2022 Alice Wong 2

© 2022 Alice Wong 3

© 2022 Alice Wong 4

• Patent is NOT a positive right but a right to exclude.

© 2022 Alice Wong 5

• Self police & proactive defense

© 2022 Alice Wong 6

• Invalidity & Revocation

© 2022 Alice Wong 7

© 2022 Alice Wong 8

© 2022 Alice Wong 9

• Scope of claims as interpreted in light of specification & arguments

A) Literal Infringement 字面侵權

B) Doctrine of Equivalence 等同侵權

© 2022 Alice Wong 10

(A) Contributory (sale of non-staples)

(B) Induced (induce someone to directly infringe)

© 2022 Alice Wong 11

© 2022 Alice Wong 12

© 2022 Alice Wong 13

© 2022 Alice Wong 14

• Agreement/contract to define rights and obligations

• Common instruments in Biotech

© 2022 Alice Wong 15

© 2022 Alice Wong 16

• Not legally enforceable

• Legally competent parties under mutual consent

• Look at substance not label

© 2022 Alice Wong 17

3) Contractual intent (受法律約束的意圖)

© 2022 Alice Wong 18

A: “I will sell you my car for $6,000. ”

A: “I will sell you my car for $6,000.”

© 2022 Alice Wong 20

2. Customer picks up goods & goes to cashier

3. Hands goods to the cashier

4. Cashier takes the money

© 2022 Alice Wong 21

• Display of goods for sale

© 2022 Alice Wong 22

© 2022 Alice Wong 23

• District Court: No contract! The TV Commercial was merely an advertisement,

“An obvious joke, of course, would not give rise to a contract.”

© 2022 Alice Wong 24

• An offer must be withdrawn before its acceptance.

© 2022 Alice Wong 25

• Unenforceable if made under unlawful circumstances, e.g.

© 2022 Alice Wong 26

• Breach of contract = fails to perform as required by the contract.

• The law will give a remedy if there is a breach of contract, e.g.

ü Specific performance (e.g. must deliver the goods as promised)

ü Rescission (i.e. repeal the contract)

© 2022 Alice Wong 27

© 2022 Alice Wong 28

© 2022 Alice Wong 29

© 2022 Alice Wong 30

© 2022 Alice Wong 31

© 2022 Alice Wong 32

• Unilateral (“Disclosing” v. “Receiving” party)

© 2022 Alice Wong 33

© 2022 Alice Wong 34

• Limited to licensed patents • As broad as possible

© 2022 Alice Wong 37