Our Licensing Guidelines
Although every technology license is unique, at PNNL we recognize that there are basic phrases and language used in many of our agreements. Following are some guidelines we use in working with our customers.
- Definitions
- Every license will have a section that defines terms that will be used throughout the license. Examples include the patents or inventions, copyrights or Battelle technical information (intellectual property or IP) that are being licensed; the licensed field; the licensed territory; and the basis for royalty calculations or other consideration. The licensed field is defined based upon the specific and tangible business interests of the Licensee. The basis for royalty calculation is normally the gross sales or equivalent fair market value of products or services covered by the licensed intellectual property rights minus some specifically defined costs, such as shipping expenses. The royalty basis may also represent a price or equivalent value per unit when the parties define the unit (apparatus, copy of software, etc.).
- License Grant
- This section defines the scope and nature of license rights granted by Battelle, the most important of which is whether the license is exclusive or non-exclusive in the defined field of use.
- License Fee
- A negotiated up-front license fee, in the form of cash and/or other considerations, is identified.
- Royalties
- The royalty rate to be assessed on the royalty basis defined in the definitions section is identified.
- Diligence
- All licenses incorporate some type of diligence that stem from Battelle's expectation that the Licensee will actively develop/commercialize the licensed IP. They nearly always include future minimum annual cash payments. Diligence terms for exclusive licensing are much more substantive than for a non-exclusive license. In addition to minimum annual cash payments, they usually include milestone requirements and/or minimum earned royalties. Consequences for the Licensee's failure to meet diligence range from Battelle's right to terminate the license to the right to convert it to a non-exclusive license. The Licensee may terminate the license at any time with 60 days notice.
- Sublicensing
- Sublicensing rights (if any) and obligations are identified. The right to sublicense is normally included in exclusive licenses and not included in non-exclusive licenses. A separate lump sum and royalty schedule for sublicenses may be negotiated.
- Reporting and Payments
- A process and schedule for reporting royalties and making payments is described.
- Representations
- Battelle's intellectual property rights arising from either its privately funded activities or those funded by the Government are licensed "as is." No representations or warranties are provided that would cause either Battelle or the Government to have any liability for anything (including third party patent infringement issues) that may arise in the future related to the licensed intellectual property rights. Battelle represents that it does have the right to grant the rights outlined in the license agreement except those that the U.S. Government may assert. Battelle will declare that it is unaware of any third party patent infringement issues associated with the rights being licensed unless Battelle is aware of such a situation that exists. In those cases, Battelle will inform the Licensee.
- Termination
- In licenses of patent rights, the terminal date of the license is normally set as the date that the last patent licensed in the agreement expires or goes abandoned. As noted previously, Licensee may terminate the license at any time by giving 60 days written notice and discontinuing use of the licensed intellectual property rights. Battelle cannot terminate the agreement unless the Licensee is in default of its obligations, including failure to meet minimum royalty requirements or milestones under the agreement.
- Litigation
- Responsibilities for identifying and pursuing infringers are identified. In exclusive licenses, the majority of such responsibility falls on the Licensee.
- Patents
- Battelle reserves the right to file, prosecute and maintain Battelle's patent rights. The share of the costs of these activities funded by the Licensee is negotiable, with the expectation that this share is higher for exclusive licenses.
- Records
- The Licensee is expected to keep accurate records of operations affecting payments under the license and Battelle has the right to inspect such records.
- Publicity
- Battelle's name cannot be used in publicity without obtaining written permission.
- Marking
- The Licensee is expected to place a mark on products embodying the licensed patent(s) that is consistent with laws concerning the marking of patented articles. If marking the product is impractical, the marking will be made on labeling or packaging. A marking provision is also required for licenses of copyrighted software. The Licensee is expected to include similar marking provisions in sublicenses.
Provisions for licensing of intellectual property derived from Government funds: Because Battelle operates the Pacific Northwest National Laboratory under contract with the U.S. Government and much of the intellectual property licensed by Battelle is developed under this contract, there are a number of licensing provisions that are incorporated in such licenses to fulfill Battelle's contractual responsibilities, including:
- A statement indicating that Licensee will owe no royalties for sales to the U.S. government of products incorporating the licensed intellectual property
- A provision in the Representations clause in which the Licensee indemnifies the Government from all liability related to the licensed intellectual property
- A clause indicating that Licensee will comply with all U.S. export laws
- A clause providing for Government march-in rights per 35 U.S.C. 203
- A provision stipulating that products incorporating the licensed intellectual property will be "substantially" manufactured in the United States
Additional requirements associated with exclusive licenses of intellectual property developed with Government funds include:
- A provision whereby the Government retains a royalty-free, non-exclusive license for Government use
- A provision certifying that no principal of Licensee has been an employee of Battelle within the last two years.