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Let's talk antitrust: Discussing recent cases and emerging competition issues
Recent cases and judgments have shone a light on some emerging themes and trends that companies will want to consider as part of their risk management framework.
Global | Publication | September 2015
We all know that licensing of our intellectual property can be beneficial to a business. But, in order for that to happen it is important that, that the agreement is drafted properly. Below is a checklist of some of the common issues which should be considered when concluding an intellectual property licence:
When dealing with and negotiating an intellectual property licensing agreement, it is important to understand the nature of the intellectual property rights being licensed and to ensure that you properly define them in the agreement.
The nature of the intellectual property will naturally affect other provisions of the agreement. This is particularly so when one is dealing with copyright. Copyright is a bundle of rights, which includes: the right to perform the work in public, to publish the work, reproduce the work, to translate the work to adapt the work i.e. convert the work into a novel or other type of work, and the right to distribute the work.
These rights may be licensed individually or as a bundle of rights granted to a licensee.
A vital element of a licence agreement relates to the scope and extent of the rights granted to the licensee, as well as any limitations on those rights. The scope of the licence is usually informed by the intellectual property licensed and it may also depend on the type of agreement. For example, in publishing agreements where the type of intellectual property in issue is copyright, typically, the writer would grant the publisher the right to “produce, copy, and publish the book in any format including electronic”, while retaining the remainder of the copyright, which would include the right to make adaptations, serialise the book, reproduce the book in foreign language, convert the book into a movie or television series etc.
The type of license required should be informed by the nature of the relationship being created between the parties. There are three types of licences:
Tax issues should be considered, especially if the licence of the intellectual property is granted offshore. Issues of withholding tax come into play also when royalties are paid to a foreign company by a South African resident for use of intellectual property. In addition, exchange control requirements must not be overlooked.
A licensor may be continually making improvements to the intellectual property, even after the effective date of the agreement. The right to any improvements should be negotiated as part of the overall license agreement.
Similarly, the agreement should cater for instances where the licensee works on the intellectual property and in the process creates new intellectual property. The ownership of the new intellectual property or improvements should be adequately dealt with.
Typically, the licensor takes responsibility for the prosecution and payment of annuity fees but may request to be reimbursed for the payment of annuity and maintenance costs for the intellectual property. Usually, the licensee is required to maintain a good record of accounts relating to all transactions affecting the intellectual property. This clause is especially important where the royalty payment is linked to revenue created through the use of the intellectual property.
This is a very important part of the agreement. The licensee should provide the licensor with an indemnity against any claims which may arise from his / her use of the intellectual property. Equally so, the Licensor should provide a warranty that they own the intellectual property and it does not infringe third party rights.
Video
Recent cases and judgments have shone a light on some emerging themes and trends that companies will want to consider as part of their risk management framework.
Publication
After a lacklustre finish to 2022 when compared to the vintage year for M&A that was 2021, dealmakers expected 2023 to see the market continue to cool in most sectors, in response to the economic headwinds of rising inflation (with its corresponding impact on financing costs), declining market valuations, tightening regulatory scrutiny and increasing geopolitical tensions.
Publication
On 18 September 2023, the CMA published its Initial Report (Initial Report) on AI Foundation Models (FM), supplemented in April 2024 with the publication of its “Update Paper” focused on potential antitrust risks associated with FMs and a “Technical Update Report” providing more detail on the development on FMs (collectively the “Reports”). Below, we consider these CMA publications.
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