Review License Agreements
Review all license agreements relating to the target IP. This will include license agreements to the target IP itself and freedom to operate licenses. In either case, the scope of the license grant must be broad enough to practice the invention as your business intends. Check the license for geographical and use restrictions that are inconsistent with your business goals. What is the term of the license? Are the rights transferable? Even in a freedom to operate license, the validity of the licensed patents should be evaluated if there is a royalty obligation. Check to determine who has the right to enforce the patents under the license. Make sure that there are no grant backs or improvement provisions in the license agreement that might implicate your pre-existing intellectual property.
Review all licenses in the chain for:
- Use restrictions?
- Geographic territory?
- Enforcement obligations
- Royalty obligations
- Validity of licensed patents
- Grant backs or improvement provisions that reach acquirer’s IP
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