CLP Licensing Negotiations & Deal Structuring Flashcards
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Read the first 6 CLP Licensing Negotiations & Deal Structuring flashcards as text
What is the difference between an option agreement and a license agreement in IP deal structuring?
Answer: An option grants the right to negotiate or obtain a license within a defined period; a license grants immediate IP use rights
An option secures the exclusive right to negotiate or execute a full license later, allowing the party to evaluate the IP before committing to a full license.
In negotiating royalty rates, the 'hypothetical negotiation' framework asks parties to imagine a negotiation:
Answer: Occurring just before infringement began, between a willing licensor and willing licensee
The hypothetical negotiation standard, used in US patent damages law, envisions a negotiation at the eve of first infringement between willing parties to determine a reasonable royalty.
Which deal structure is most appropriate when a startup lacks cash but has valuable IP?
Answer: Equity-based licensing in which the licensor receives ownership stake instead of cash royalties
An equity-based deal allows cash-poor startups to compensate the licensor with company shares, aligning both parties' interests in the company's success.
A 'field of use' restriction benefits the licensor in deal structuring primarily by:
Answer: Allowing multiple licensees in different fields, maximizing total deal value from the same IP
Field-of-use restrictions let the licensor divide IP rights by application market, signing different partners for each vertical and extracting maximum value.
What is a 'right of first negotiation' (ROFN) in a licensing context?
Answer: The right to be the first party to negotiate a license before the IP is offered to others
A ROFN obliges the IP owner to offer the holder an exclusive negotiation period before marketing the IP to other prospective licensees.
Which negotiation concept involves making an initial offer significantly above or below the target to anchor the counterpart's expectations?
Answer: Anchoring
Anchoring is a negotiation tactic where an extreme first offer shapes the other party's perception of a reasonable settlement range.