Businesses licensing inbound technology or IP usually spend legal effort on ensuring that the licensor can’t assign the operative license agreement to a third party without the licensee’s consent. Often overlooked, however, is the risk of a licensor transferring the actual IP that is the subject of the license in question. The licensee’s hard-fought clause victories, like indemnities, might be for naught if the subject IP is sold. Datatreasury v. Wells Fargo (Fed. Cir. 2008) (“procedural” license terms–like an arbitration clause–do not “run” with the patent and so are not binding on subsequent owners).
One workaround is something like the following, featured in a Redline query about this topic:
Licensor shall ensure that (a) any transfer of ownership of intellectual property rights associated with the Licensed Technology will be subject to Licensee’s rights granted under this Agreement, and (b) any such transferee assumes the obligations of this Agreement. Any purported transfer not compliant with the foregoing will be void.
Problems abound with this approach, so another less obvious workaround, also taken from the same Redline query, is to modify the standard anti-assignment clause, as follows:
Neither party shall assign, subcontract, sublicense or otherwise transfer this Agreement
,or any interest or subject matter of this Agreement, or assign or delegate any of its rights or obligations, without the prior written consent of the other party. Any such unconsented assignment or delegation will be void.
Join the colloquy here.
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