The Licensing Corner

• Publication year: 2014
• Author: James C. Roberts III

The Licensing Corner

James C. Roberts III

Global Capital Law Group PC

ODDBALL DRAFTING

Every once in awhile an agreement crosses my desk with "odd" provisions—language that makes me say "Huh?" It does not matter that thorough explanations and reasonable fixes are a few mouse-clicks away from anyone; weird provisions still seem to appear. So, in this column, I will explore a few of them that have occurred in recent times more than once. For those of you with long memories, you might recall some of these oddballs have been the topic of this column, but here I want to explore them with a weathered eye toward drafting.

The Once and Future Assignment

Often a license agreement crosses my desk that includes an assignment provision that is all too often invalid. It seems that someone keeps forgetting case law of the last quarter century (or so) making the rule quite clear: Assignments must be in the present tense to be valid.

That lesson is in the Federal Circuit Court's opinion underlying the US Supreme Court's opinion in Stanford v. Roche. (The Federal Circuit opinion is at 583 F.3d 832 (2009)). Some of the facts are worth reviewing, especially the "competing" assignment provisions at the heart of the (potentially) multi-billion dollar matter. Here's what happened:

Competing Assignment Language

Stanford hired a researcher who signed Stanford's standard "Copyright and Patent Agreement" by which the researcher assigned his rights to Stanford. The relevant language went as follows:

I agree to assign or confirm in writing to Stanford and/or Sponsors that right, title and interest in [...] such inventions as required by Contracts or Grants.

With Stanford's knowledge the researcher then went down the street (literally) to work from time to time with Cetus, a genetics research firm (later acquired by the multinational pharmaceutical, Roche). There the researcher signed another agreement—the Visitor's Confidentiality Agreement, which included the following language (bracketed language my addition):

I will assign and do hereby assign to Cetus, my right, title, and interest in each of the ideas, inventions and improvements [arising from my involvement here...].

Basically, the court held that the second assignment trumped the first one. Why? It was the only valid assignment. Stanford's agreement did not use language that actually assigned intellectual property rights. Therefore, the researcher did not assign his rights until he signed the Cetus agreement, which did include a...