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   You license, get money but don't get patent!
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   Author  Topic: You license, get money but don't get patent!  (Read 746 times)
Tony Kondaks
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You license, get money but don't get patent!
« on: Nov 24th, 2006, 5:58pm »
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Assume I file a provisional patent application.
Assume I go out into the marketplace and actually sell some company a license to the invention(s) contained in the provisional application.
Fast forward several years and assume that the Patent office REJECTS my utility patent and I cannot get a patent.
Assume that between the time of my filing of the provisional and the final rejection, I have received $1 million in licensing fees.
Do I have to give the $1 million back to the licensee?
If not, why not?
Would it be because I would have written something into the license agreement that would have protected me in the event the patent wasn't granted?
If so, what exactly should be included in the agreement?
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JimIvey
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Re: You license, get money but don't get patent!
« Reply #1 on: Dec 1st, 2006, 12:31pm »
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on Nov 24th, 2006, 5:58pm, Tony Kondaks wrote:
Assume I file a provisional patent application.
Assume I go out into the marketplace and actually sell some company a license to the invention(s) contained in the provisional application.
Fast forward several years and assume that the Patent office REJECTS my utility patent and I cannot get a patent.
Assume that between the time of my filing of the provisional and the final rejection, I have received $1 million in licensing fees.
Do I have to give the $1 million back to the licensee?

It depends.  What does the license say?
 
on Nov 24th, 2006, 5:58pm, Tony Kondaks wrote:
If not, why not?

Because the license says so.  There would be a number of theories as to why such a license would be valuable.  It could set a favorable rate of royalties during a period when the viability of issued patent rights are in doubt -- sort of like a futures contract.  It could be an exclusive license and the licensee could be paying for your promise not to license the same technology to anyone else (presumably protected as a trade secret as long as possible).
 
on Nov 24th, 2006, 5:58pm, Tony Kondaks wrote:
Would it be because I would have written something into the license agreement that would have protected me in the event the patent wasn't granted?

Yes.  There may be some caselaw that explains how that works in the absense of any pertinent language in the license.  I'm not familiar with that, though.
 
on Nov 24th, 2006, 5:58pm, Tony Kondaks wrote:
If so, what exactly should be included in the agreement?

Sorry, don't have specific language to share.  Something like "The obligation to pay royalties under Section ?? expires in the event that no claim covering the technology described [elsewhere] is either pending or issued.  Upon such an event, LICENSOR has no obligation to return any royalties paid prior by LICENSEE to such an event."
 
Regards.
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James D. Ivey
Law Offices of James D. Ivey
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