Let's talk about Intellectual Property Agreements. As a reminder, intellectual property is a legal term that refers to creations of the mind. And I.P has many of the same rights that you are familiar with when it comes to real or personal property. Which means that it can be bought, sold, licensed, or otherwise leveraged for financial transactions. The primary forms of intellectual property include patents, which are used to protect inventions. Trade marks which are used to protect your brand and logos and things that are associated with the image of your company. And copyrights which are used to protect expressions, your software, your web pages, your marketing material, anything that's in a written expressive form. So in this lesson we're going to focus on methods for transferring intellectual property rights. We'll spend some time talking about key terms that you want to include in your IP agreements. We'll spend a few minutes talking about some issues, that come up in connection with software licenses. And then we'll just highlight a few employment issues that are important to keep in mind when dealing with intellectual property issues. So first transferring IP rights. We're going to just talk about two primary methods for transferring IP rights. And that is assignments or licenses. You may hear these terms thrown around a lot and they're very different, assignments are used to transfer all rights in intellectual property. And licenses are a way to transfer less than all rights in intellectual property. So with respect to a license, the person who's licensing the technology or licensing the intellectual property retains some rights in the property. I like to say that assignment is giving it away and a license is like loaning it. So for example, in a rental car, when you get a rental car, the agreement that you have is actually a licensing agreement. The rental car company retains ownership in the car. And they're just permitting you the right to use the car for a limited duration, that's a license agreement. Whereas an assignment would be the full out sale of the car. So key terms that you want to keep in mind when negotiating an intellectual property agreement. The first and probably the most important is the subject matter to be licensed, wherever in your license agreement you want to be sure that it's very clear exactly what you're licensing. Is it patents? Is it trademarks? Is it copyright? Is it all intellectual property? Stay away from broad terms, like all intellectual property or all patents unless you're very clear about what you're actually transferring in the agreement. The next is the scope of the license. Are their geographic restrictions on how the licensed intellectual property can be used or exploited or the use restrictions? Maybe someone that has a patent can use it in one way, but can't use it in another way. The duration of the license should be spelled out pretty clearly. Is this a perpetual license meaning that the owner of this license will always have the rights that you're granting in the license agreement? Or is it something that is less than perpetual? Whereas the person who's gaining the license can only use the licensed IP for one year or five years. We want to make sure that you spell that out pretty clearly in your agreement. And then exclusivity is another big issue that comes up when you're negotiating an IP license agreement. Oftentimes the idea that the licensee, the person getting the license wants to be the exclusive licensee, meaning that as the licensor or the person granting the license, you are unable to license the IP to someone else During the pendency of the exclusivity. Make sure that you understand exactly what you're giving up or what your licensing, or what you're gaining as part of the license agreement, if you're on the other side of that agreement. Another big term in key term to ensure that it's spelled out pretty clearly in agreement is payment terms. And payment terms have a couple of flavors. One, it's the actual price. How much is being paid for the IP rights that are being transferred in the agreement? And also when will that amount be paid? Is it a lump sum? Is it paid in installments monthly ,annually at certain milestones? All of these ideas around payments should be spelled out very clearly in the agreement, so there are no misunderstandings later. Another section of the agreement and this could be multiple sections that can be spelled out in one big section of the agreement. But key for you to understand are representations, warranties and covenants. Representations and warranties are essentially statements that either party to the agreement make, so that it's very clear whether the parties understand what each side is bringing to the table in the agreement. And covenants are promises that one or both parties may make, that impose conditions on the license, that impose things that must be done before payment is due. These types of covenants that are in the agreement should be very clear to you as you're entering the agreement, but it should also be spelled out very clear in the written aspects of the agreement. So both parties understand what's being bargained for. And then finally, indemnification. Indemntification is a legal term that means that one party will stand in the place of another party in the event that there's some legal action taken that's subject to the agreement itself. So, for example, if you are the person obtaining a license, you may seek indemnification from the person giving the license, if by getting the license and using the technology, you are inadvertently infringing on some other person's intellectual property rights. And so you may want to insist in the agreement that the person granting the license rights will stand in your place and indemnify you, defend you, hold you harmless from accusations from some third party that you're infringing their IP rights. Indemnification can come in many forms and so you want to make sure if you're negotiating an IP license agreement, that you seek advice of an attorney to ensure that all of your rights and key liability exposure that may come up is protected and spelled out fairly well.in the IP agreement. Let's say a bit about software licenses. A software has become a very prominent use of licenses. And there are few flavors of software licenses. And we'll talk about three here, but keep in mind that there are multiple ways of licensing software. The first is shrink -wrap licenses, this is decreasingly becoming relevant, but it's still somewhat relevant, so well noted here. Shrink- wrap licenses were used when software was distributed through like CD Rom's and those types of physical ways of distributing software. And essentially with a shrink- wrap license says is by opening the software the packaging of the software you are agreeing to the license terms for the software. Click- wrap licenses which are now used more frequently is very similar. Except it requires that the licensee, the person obtaining the software clicks an I Accept button signifying that they accept the terms of the license agreement. Now, as a provider of software using software licenses for these ways of mass producing your software or distributing your software broadly using these types or forms for your license agreements are easy to do, it's common to do. And it makes your cost of getting users signed up for your license agreement and retaining the rights that you want to retain in the software. It helps you accomplish that, but there are some things to keep in mind. The best practice there is to ensure that the user is taking affirmative step to accept the terms of the license. Otherwise, you run the risk of a court later down the road deciding that the user didn't actually accept the terms of the license and you may lose some of the rights that you are intending to retain in the software. Click- wrap licenses, help with this a good bit, because the user is actually affirmatively clicking an I Accept button. Shrink- wrap licenses to a greater extent, is not providing that kind of affirmative step to signify that the user actually agrees to the terms of the license. Then, let's say a bit about open source software. Open source software, as many of you know, it's very common, engineers use open source software in various forms and in various aspects of the software projects that they work on. But there are few issues that you want to keep in mind when using open source software. The first is that oftentimes open source software is freely downloadable, it's freely available, but there aren't representations on how good the software maybe. And so, by incorporating open source software into your product offerings, you may be taking on additional risk in terms of the stability and the operability of the software. In addition to those types of issues, open source software oftentimes are provided under multiple different types of license agreements. Sometimes the providers of open source software require in their license agreements, that the user of the open source software also make available their changes to the software also make those changes available as open source. So, as a business owner who's incorporating open source software into your product offerings, by not being very careful about reviewing the particular license agreements for that software, you may be inadvertently, agreeing to make your product offering and your software also available as open source. It's very important to understand the specific terms of open source, so that you understand what rights and obligations you have as the user of the open source. One of the things to keep in mind in terms of best practices here is with employees. Oftentimes engineers are looking for open source software wherever they can find it, it's easy, it's very prevalent. And so you want to make sure that you put a mechanism in place and educate your engineers about open source software, the licenses that are involved, and if you need help, you want to consider getting a lawyer to help you think through the implications of using different types of open source software and the licenses that are associated with that software. Now, few issues about employees. We just talked about educating your employees and your engineers about open source. But there are a few other agreements that you want to make sure you have in place regarding intellectual property with respect to your employees. The first is a non- disclosure agreement. Non- disclosure agreements allows you to protect your confidential information from inappropriate or unauthorized disclosure by your employees. This is very important when it comes to not just like generally confidential information ,but things like trade secrets for example by having this in place, it allows you to establish that you want this information to be confidential. And it also gives you a mechanism for a remedy if an employee breaches this agreement. And then there are two disclosure agreements that are very important for you to have to not only protect you from liability, but also protect your company from inappropriate disclosures or inadvertent transfer of IP rights from the company. The first is an invention disclosure agreement. This is something that you want to have your employees provide up front when you bring them on. This essentially allows the employee to disclose all inventions that they've had prior to employment. So if you hire an engineer that has already been an owner of multiple patents, you want to know that up front, so that it's no confusion as to who owns those intellectual property rights. The second, is an invention assignment agreement. And what this does it's an agreement between you and your employee that says that any inventions or intellectual property that is derived during the period of employment, that invention will be assigned to the company. And there's a legal distinction between an agreement to assign and an agreement that actually assigns and you want the latter. In your invention assignment agreement, you want the agreement to say that any inventions that are derived during the period of unemployment are assigned to the company. That way, if your employee works on invention as your employee, files for a patent application or get copyright protection that actually intellectual property is actually owned by your business and not the individual employee. Very important stuff to keep in mind with when dealing with employees. And it ensures that the company's intellectual property rights are maintained very clear and protectable. So in summary, assignments and licenses are different assignments are giving all of the rights that you own intellectual property over to the assigning licenses which are more prevalent or a way of transferring some rights into intellectual property without giving all of the rights away. When you're entering into intellectual property agreements, you want to make sure that you understand the rights, the scope of those rights, payment terms, and other issues that are being negotiated in the agreement. Make sure you understand those, there are ever any questions about particular provisions in a proposed IP agreement or during a negotiation. It's best to seek help from an experience IP Attorney before entering into an agreement. And then finally, you want to conduct what we call due diligence before entering into an intellectual property agreement. And due diligence is essentially you want to conduct a proper investigation. By following these steps you will ensure that any IP agreement that you enter into will best protect your company's intellectual property.
