FALL 2009
Licensing Intellectual Property
 
Course No.:  9200-705 (&805)-801
Course IDs:  85285, 85286
Tu 6:30 - 9:30 p.m.
Room W-215
Professor Jay Dratler, Jr.
Room 231D (IP Alcove)
(330) 972-7972
jdratler@gmail.com
Copyright © 2000, 2001, 2002, 2003, 2005, 2006, 2008, 2009   Jay Dratler, Jr.   For permission, see CMI.
 

Assigned Reading
Week 1
Week 5
Week 8
Week 11
Week 2
Week 6
Week 9
Week 12
Week 3
Week 7
Week 10
Week 13
Week 4
Week 14

Markup Abbreviations

      These Markup Abbreviations will be used throughout the semester to provide feedback on all your written work in this course.  Please read them through at your leisure before the second class to get an idea of the standards that will apply to your written work.

Grading Criteria and Writing Hints

      These Grading Criteria will be used for most of the writing assignments in this course.  You may wish to review them, as well as the writing hints that follow, before each writing project.

Submitting Your Papers

      Please follow this procedure exactly for each assignment, so that your work can be graded on time and anonymously.

Week 1

Tuesday, August 25:  Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), Preface and pages 3-27, On-Line Problem Supplement, Introductory Note and Problem 1; Jay Dratler, Jr., Licensing of Intellectual Property Ch. 1A.01 (Law Journal Press 1994 & Supps., Westlaw on-line version); On-Line Problem Supplement, Exercise A: Problems in Licensing Scope and Strategy and Problem 1.

If necessary, bone up on aspects of intellectual property that you don't recall or find fuzzy.  For this purpose you can use your notes and outlines from classes taken previously (if any) or the Nutshell book recommended (but not required) in the Course Description.  

Class discussion will first focus on strategic considerations in licensing, Exercises 1-4 on pages 21-22, a strategic comparison of the various fields of intellectual property outlined on pages 23-27, and relevant aspects of Problem 1.

Next, put on your business and economic hats.  Then, based on your reading and business knowledge, experience and intuition (if any), work the problems in Exercise A, individually or (preferably) in study groups.  Be sure to make notes on your analysis and conclusions.  We will spend the entire class session on the problems.  Thirty percent of your grade will be based on your class performance, which includes your in-class problem solving.  If we have time, we will apply some of our learning to preliminary analysis of what each side in Problem 1 would desire and expect to receive.

Read Problem 1 for background and future work, and keep it in mind as we discuss the readings and the exercises for this first week.   Be sure to read it carefully, several times!  You will need a solid grasp of the facts, as we'll be working with them all semester.  We will finish up this problem and you'll submit answers after we've covered trademarks.

Note: for the work this week, as for work in this course in general, you are welcome—and indeed encouraged—to cooperate in study groups, including a single group consisting of the class as a whole.  The only caveat is that you should all write your own papers independently.  And of course you will be on your own in solving problems when called upon in class.  Collaborating on "thinking through" problems, however, is strongly encouraged.  It's what many of you will do in practice, unless you work as true sole practitioners (a rapidly vanishing breed).
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Week 2

Tuesday, September 1:  Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), pages 80-95.  Work through the trademark distinctiveness problems on pages 94-95 (Note 4) and record your answers and the steps in your reasoning.  Then, review your notes from the first week's discussions and reread (or skim) Jay Dratler, Jr., Licensing of Intellectual Property Ch. 1A.01 (Law Journal Press 1994 & Supps., Westlaw on-line version).  Finally, work the problems at the end of Chapter 1, pages 18-22, which we will discuss in class.

As you read the material from the casebook on various forms of IP, consider the following questions.  What are the legal and practical differences: (1) between patents and copyrights; (2) between patents and trademarks, and (3) between copyrights and trademarks?  What things best fall under each of the three regimes?  Are there any gray areas or overlaps?  If so, what things fall into the gray or overlapping areas, and how do you decide which form of protection to use for them?  Suppose a client asked you these questions; how would you reply succinctly, simply and accurately?

For your first writing assignment (Exercise 1), ignore the last paragraph of Problem 1, and consider instead the following message that you have received by e-mail from Contair's CEO:
    "I'm meeting with my top management and investors next Tuesday, and we all are concerned about the company's future.  The proposed Bevi's deal looks good to me.  I see it as a way to keep the company going in its original business: making the world's most luxurious sports cars.  Some investors, however, are getting nervous.  I think they might like to sell the company or its assets."

    "We've never done any licensing deals before, and I don't know much about trademarks.  Although I think I understand what a trademark license to Bevi's or a sale of the business would involve, I'm not sure I've covered all the bases, especially any legal or practical pitfalls we might encounter.  I'm also not sure what Bevi's will ask for or what's reasonable for us to give."

    "So could you write me a short memo on these subjects?  Please give us your best advice on what Bevi's will ask for and where the licensing deal (if made) is likely to end up.  Also, compare the benefits and risks of the Bevi's licensing deal with a sale of the company or its assets and make a recommendation.  Please write a very short memo, no more than 600 words, to be used as a springboard for discussion in our meeting next Tuesday."
We will end class by discussing this problem in depth.  You should come to class with a first draft of the memo (which may be a little overlength for later "pruning.")  You will not submit your paper today; instead, you will use what you gain from class discussion to rethink, revise and improve your first draft.  Please write a final draft of the requested memo and submit it as described in Submitting Your Papers, by 5:00 P.M. EDT on Tuesday, September 8.  Before beginning this assignment, you should review the Grading Criteria and Writing Hints and keep both in mind as you write.
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Week 3

Tuesday, September 8:  Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), all of Chapter 3 (Intellectual Property Audits), and all of Chapter 4 (Negotiating the License).

Next, work Problem 4 (Nondisclosure Agreement and Evaluating Alternative Deals, esp. Parts 2 and 3) and the following problems:
    1.  You represent A, a small start-up research boutique that focuses on veterinary biotechnology.  One of A’s scientists has made an important and startling research discovery.  Her new technology has broad application to both human and animal health care and might even lead to a cure for cancer.  The discoverer has described her results generally at scientific workshops but always withheld details and key steps.  Already five biotechnology firms and two major pharmaceutical manufacturers have made inquiries, asking for more information and seeking licenses of the new technology.

    Preliminary search results suggest that the new technology is patentable and could enjoy a strong patent.  A has asked you for advice on IP protection and licensing.  Outline a general protection and licensing strategy and optional alternatives, along with the risks, advantages and disadvantages of each.

    2.  B, an individual computer programmer, has developed a new algorithm for compressing images.  The algorithm makes it possible to record full-resolution images (such as photographs) using one-fourth the storage space that previously was possible.  With reduced file sizes, image transmission can be accomplished in one-fourth the time required previously, with no loss in image quality.  B has written a computer program to implement his algorithm; the program quickly compresses image files stored in most currently popular formats, including JPG and GIF.

    Without making the algorithm or his computer code available to anyone, B has developed a Website that allows users to “test” his algorithm and program by uploading images for compression and decompressing the results.  B believes that it would be very difficult, if not impossible, for anyone to discover his algorithm by “reverse engineering,” i.e., by studying a compressed image file and comparing it to the original image file.

    B has received inquiries from Microsoft, Google, Yahoo, Oracle and several smaller companies in the computer industry.  Advise B on a strategy for protecting his IP and licensing it for maximum revenue in the long term.

    3.  C, an elderly garage inventor, has developed an improvement for lawn mowers.  His improvement prevents jamming, chipping and dulling of the cutting blades.  It works so well that it allows lawn mowers to run though beds of gravel for up to ten minutes without reducing their cutting power.

    Only three firms in the United States make lawn mowers.  C has sent notices of his discovery (without disclosing details) to each of them, and each has responded with enthusiastic interest.  What type of IP protection would you recommend for C?  What licensing term do you think would be most central to his licensing strategy, and what sort of strategy (with respect to that term and related terms) should C follow?
Class discussion will first focus on intellectual property audits, which will be the subject of your next writing assignment.  Review the facts relating to Contair in Problem 1.  What would you do to perform an IP audit for Contair?  What personnel would you interview, what records would you review, what (if any) experts would you hire, and how would you organize your work?  What potential conflicts of interest might you find, and how would you avoid or reduce them?  What do you think the audit would cost and how long would it take?  What might you expect to find in an audit that you don't already know?  How valuable would that information be to Contair and in what ways?  to you as Contair's adviser? How would you "sell" the audit to Contair's President and Board of Directors, i.e., how would you convince them that doing the audit, and paying for it, would be in Contair's best interest?  How would you answer questions, should any arise, about possible conflicts of interest, especially regarding your fee?

We will spend the remainder of class time discussing the problems.  They relate to audits because they illustrate the strength and pitfalls of various kinds of IP.  Which kind of IP best protects against unlicensed competition? independent development of the same or similar IP? "reverse engineering"?  (If you don't have quick answers to these questions, hit the books and bone up on basic IP.)  Which type of IP would you recommend for each of the IP owners in the problems, and why?  Does it have any pitfalls or commercial risks? How would you account for pitfalls and risks in an audit?  What additional steps/precautions would you need to take as a lawyer to establish, perfect and maximize IP protection?
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Week 4
Tuesday, September 15:  Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), reread pages 124-179; work Problem 2 (Convincing Contair to Conduct an IP Audit) and Problem 3 (Guiding Contair Through an Acquisition);  read and think about Problem 4, Part 2.  (Problem 4 will also be the subject of written exercises, to be submitted later, after further discussion.  So be sure to study it carefully.) 

At beginning of the of the session, we will have and review your mock negotiation of the points mentioned in Parts 1 and 2 of Problem 4.  Remember to consider how your estimate of valuation of Contair's IP does/should/did affect the negotiations.

Problem 2 will be the subject of your next written assignment, while Problem 3 will be for class discussion only.  After the mock negotiations, we will discuss both problems in class, in order.  As time permits, we will also introduce the subject of nondisclosure agreements (NDAs), focusing on the meaning of the Tridair case (pages 141-143) and the likely substance of an NDA in the factual context of the Problems at the end of Chapter 4 (Notes 1 through 8, pages 171-173).

 

For your second writing assignment (Exercise 2), prepare the memo in Problem 2: Convincing Contair to Conduct an IP Audit, and submit it as described in Submitting Your Papers, by 5:00 P.M. EDT on Tuesday, September 22.  Again, you should review the Grading Criteria and Writing Hints before beginning this assignment.  You also should review quickly your performance on the first assignment, so that you can focus on any relevant areas for improvement of your writing (particularly organization) identified in the first markup.  Please observe the 500-word length limit strictly, and proof your paper for typos, missing words and other mechanical errors before submitting it.
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Week 5

Tuesday, September 22:  Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), pages 181-240: all of Chapter 5 (Valuation of Intellectual Property), including Appendices A and B at the end.  Unless you have had recent courses or experience in accounting or economics, you should read Part I (Introduction) first quickly, then read Appendices A and B, then read Part I again slowly.

Also, please review your marked-up paper for Exercise 1, which should be returned by 9:00 a.m. on this day.  Make notes of any questions or difficulties you had in preparing it.  

In class we will introduce the concept of valuing IP, discuss its importance in business, and discuss some key methods of valuing IP.  Then we will complete our discussion of NDAs (if necessary) and spend about fifteen minutes in mock negotiation of the points that you have identified in Part 2 of Problem 4.  In your mock negotiations and the discussion to follow, we will try to "put it all together" and see how estimates of valuation intimately interact with price, scope and other terms of a licensing agreement.

To provide a concrete basis for discussing these issues, we will focus on two problems involving Contair.  The first will be the proposed license from Contair to GNN of Contair's production technology, which is discussed in Parts 1 and 2 of Problem 4.  Second, as time permits, we will discuss the alternatives for exploiting the VRS technology (license to GNN, or license to or joint venture with Assist), discussed in Parts 3 - 5 of Problem 4.  Be sure to commit the facts and key issues of all these problems to memory.

As you think about the problems and the art and science of valuation, consider the following questions.  In each proposed deal, what legal and business issues (if any) could be resolved without valuing the IP in question?  If you were Contair's CEO, would you want to discuss "price" terms (including valuation) first, or after only discussing scope and other legal terms?

Which would be the best way for negotiations to begin?  Which would be best from the standpoint of efficiency, i.e., not wasting executive time and lawyers' fees?  Which would be best from the standpoint of psychology, i.e., establishing an atmosphere of cooperation and trust?  Are the answers to these questions necessarily the same?

How do you deal with uncertainty in valuation?  For example, if a prospective business partner (GNN or Assist) proposes a result or method of valuation that would make the deal untenable for Contair, what do you do?  Do you: (1) walk out, (2) refute the result or method with detailed criticism and analysis, (3) propose an alternative method of valuation with a different result, (4) try to negotiate "nonprice" terms, such as scope, that would increase the value of the deal to Contair, (5) talk about other things for a while to establish better rapport, (6) terminate the discussions with a promise to "keep in touch," or (7) take some other approach?  Is this a decision to be made solely by you as counsel?  If not, what role should you play in it?  Might any ethical issues arise in this delicate preliminary stage of negotiations, in which both parties are trying to "take the measure" of each other, and, at the same time, determine whether each proposed deal has enough economic potential to make further discussion worth while?

At the end of the class session, if there is time, we will discuss your performance on Exercise 1.  Please come prepared to re-assess your work and receive constructive criticism.  If time is short, we will begin or continue this feedback next time.

For a brief written assignment (Exercise 3, which will be weighted less than other assignments), please draft an NDA responsive to Part 1 of Problem 4 (of no more than 500 words), plus answers to Part 4 of Problem 4 (of no more than 200 words), for a total of no more than 700 words, and submit them as described in Submitting Your Papers, by 1:00 P.M. EDT on Tuesday, February 16.  In drafting the NDA, you can and should refer to forms that you find on the Web or in the library, including nondisclosure provisions in the sample agreements appended to my licensing treatise.  The word limit is deliberately short in order to encourage you to think about what standard provisions are most important in the context of the current problem and to condense the standard terms to their essence.  You will not be able to include all the words and all the provisions in the standard forms, so try to make every word count.  If you "collect" different provisions from different forms, be sure to make them consistent in terminology (especially that identifying the parties!), organize them effectively, and make every sentence read like proper English.  
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Week 6
Tuesday, September 29:  Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), (1) reread or skim Chapter 5, pages 181-193 (Valuation of Intellectual Property): Introduction and Hagelin article through (II)(2) (Industry Standards); (2) carefully reread Problem 4; (3) read Problem 5; then read Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), Chapter 6 (Copyright: Multimedia and Entertainment Licensing), pages 241-262, up to (but not including) "Notes and Questions."

We will spend most of the first half of class discussing how the money terms of the proposed license interact with its scope, which you addressed in your mock negotiation.  We will reserve some time for feedback on your memos on the IP audit.  The feedback will focus on persuasive writing, how business issues interact with legal issues in licensing, and the lawyer's role in advising (or not advising) clients on business matters.

As this assignment suggests, this day will begin a "two track" learning experience.  Our first track will continue to focus on several aspects of the Contair problems that we have already read, applying concepts to which you already have been introduced.  At the same time, we will move ahead (slowly) in digesting new concepts of multimedia licensing and the "clearance" of copyright and other rights that could interfere with the use of multimedia works.  Although this experience may seem somewhat schizophrenic at times, it is not unlike the practice of law, in which you seldom, if ever, work on a single case at one time. 

Your written assignment for this week will consist of Part 1 of Problem 5: a memo evaluating and comparing the proposed VRS deals with GNN and Assist and recommending which to pursue, at least initially.  However, in writing this memo, consider the following additional facts:
    At your suggestion, Contair's CEO has hired a strategic business consultant to do some research and come up with some numbers.  The consultant has prepared the data and analysis presented in Part 1 of Problem 5, plus the projection in the last sentence of Part 3.  You and the CEO have had a couple of days to digest them.  By telephone, the CEO has asked you to write a memo outlining the major benefits and risks of each deal, comparing the two, and recommending which to pursue, at least initially.  In that telephone conversation, the CEO explained that, although he's quite familiar with the auto industry and "not bad at numbers," he would like some help "putting together the big picture on paper for the Board."  He especially would like your advice on benefits and risks that involve legal matters, such as Assist's pending patent.
In addition to giving the CEO what he wants, you have a secondary, ulterior objective.  In your telephone conversation, the CEO laid out his bargaining philosophy as set forth in Part 5 of Problem 4.  He also briefly proposed the terms stated therein, in case the decision is made to pursue the deal with GNN.  Your initial reaction is to think that his would not be an effective approach to bargaining, and you want to introduce the CEO to the notion of "interest-based," rather than "position-based," bargaining discussed in the excerpts from the book Getting to Yes on pages 144-147.  (You should go back and reread this material as necessary.  It contains one of the most useful discussions of negotiating techniques and style in recent decades.)

The CEO has not asked for your advice on his proposed bargaining position, far less his negotiating style.  Furthermore, you know that he counts every penny (especially when spent by lawyers!), and you don't want to incur his displeasure by seeming to deviate from the assignment he has given you.  Nevertheless, you would like to use this memo as an opportunity to plant the seeds of a new approach to bargaining in the CEO's mind, and you want to do so as smoothly and subtly as possible, so that he won't consciously notice as he reads the memo.  You suspect that most, if not all, of the Board members also will read your memo, so this is a good opportunity to plant such seeds subtly in their minds as well.

We will devote the entire last half of this class session to discussing how to approach these problems of substance, business sense, and client relations.  For your fourth writing assignment, Exercise 4, prepare such a memo, with a strict length limit of 750 words.  Please submit the memo as described in Submitting Your Papers, by 5:00 P.M. EDT on Tuesday, October 6.  Again, you may wish to review the Grading Criteria and Writing Hints before beginning this assignment.  This would also be a good time to review your feedback on earlier assignments and devote special effort to making improvements suggested in the feedback, especially in organization and writing.  Please be sure to think about your "organizational matrix," to observe the word length limit strictly, and to proof your paper before submitting it.
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Week 7
Tuesday, October 6:  Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), remainder of Chapter 6 (Copyright: Multimedia and Entertainment Licensing); Problem 6 and Exercise 2; Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), Chapter 7 (Key Provisions in License Agreements and Special Types of License Agreements), up to, but not including, Section II(F) (Delivery of Tangible Property).

Before working the two problems, please review the definitions of "collective work," "compilation," "derivative work," "joint work," "performance," "publicly," and "work made for hire" in Section 101 of the Copyright Act of 1976, and then read the following additional sections through carefully, at least twice: Sections 103 and 201.  If you have taken Copyright Law or Introduction to Intellectual Property, please review your notes from that course relating to ownership of copyright.  If not, try to read up on those subjects in a treatise or the Nutshell book recommended (but not required) in the Course Description.  Then please work through the two problems, preferably in groups, taking careful notes on each step in your reasoning.  Although you will not be asked to submit your answers in writing, you may be called on to discuss these problems in class.

After discussing these problems and the general subject of copyright ownership, we will finish our discussion of multimedia licensing.  At the end of the session, we will discuss your performance on Assignment 3, the Nondisclosure Agreement (NDA) and related advice.  Since this is our first drafting exercise, we will focus on techniques and tips for drafting contracts, common pitfalls, and the differences between contract drafting the other forms of legal writing.

As time permits, we will begin discussing the following written exercise, which is based upon Part 3 of Problem 5:
    Contair's CEO calls to inform you that he has set up a meeting with the chief of GNN's division that will be responsible for performing any deal with Contair.  Contair's CEO says that, at his request, the meeting will be very small and no lawyers will be present, so as "not to slow things down."  In fact, he expects only a few people to attend the meeting.  On Contair's side, he, Kuruma, and Contair's head of marketing and sales will be there; on GNN's side, GNN's division chief, a marketing executive, and a few R & D people will appear.  The purpose of the meeting will be to discuss GNN's proposed royalty terms, including the definition of "Net Sales" and the four proposals (a) through (d) (in Part 3), as well as Contair's desire for a market-share-increase royalty.
    Toward the end of your telephone conversation, Contair's CEO instructs you as follows:
      "I know what I want us to get out of this deal, but I'm not sure I understand all the implications of what GNN has proposed.  Also, I'd like some help in presenting our views and our request for a market-share-increase royalty in the most persuasive way.  You're good with words, so why don't you write me a memo containing points to make with the folks from GNN?  Please write it as if the GNN people were the audience.  I won't actually read it aloud to the people from GNN at the meeting, but I'll circulate it to everyone from our side so we all know what the game plan is and can use it for our talking points. "
    After further discussion, you understand that your memo should contain: (1) a simple and straightforward explanation of what, if anything, Contair dislikes or objects to on each point, (2) a reasonable counterproposal (or, in the case of the market share increase, proposal), complete with key snippets of language where appropriate, (3) cogent and persuasive, but very brief, arguments for Contair's proposals, and (4) a reasonable but advantageous"fallback" position for each of Contair's counterproposals or proposal that you think GNN is unlikely to accept.  As you sign off, the CEO reminds you, "Please keep it short and simple and don't sweat the details; just give me the high points that will directly affect Contair's 'bottom line.'"
    As you think about the assignment you have been given, it occurs to you that this may be a good chance to make another subtle pitch for interest-based bargaining.  You recognize, however, that you cannot be overt in making that pitch, both because you might incur the CEO's wrath and because your memo has to be so short.
For your fifth writing assignment, Exercise 5, prepare such a memo, with a strict length limit of 1000 words.  Please submit the memo as described in Submitting Your Papers, by 5:00 P.M. EDT on Tuesday, October 13.  Again, you may wish to review the Grading Criteria and Writing Hints before beginning this assignment.  You should also review the feedback on earlier assignments—particularly the third and fourth—so that you can focus on any relevant areas for improving your writing, as well as on nuances of contract drafting.  Please be sure to think about your "organizational matrix," to observe the word length limit strictly, and to proof your paper for missing words before submitting it.
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Week 8
Tuesday, October 13:  Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), all of Chapter 7 (Key Provisions in License Agreements and Special Types of License Agreements) [Please reread the short portion of this Chapter already read for last week.]; Jay Dratler, Jr., Licensing of Intellectual Property Ch. 1A.02-1A.03 (Law Journal Press 1994 & Supps., Westlaw on-line version);  Problem 7, Problem 8 and Problem 9.  Please work each of these problems carefully, preferably in study groups.  

As you read each section of this Chapter devoted to a contractual provision or clause, consider the following questions:

First, what is the clause's primary purpose?  What business and legal objectives does it ordinarily have?  Second, what are the primary interests of each party (licensor and licensee) with respect to that clause?  That is, what special interests, other than the mutual interest in a clear and fair contract, should each side consider in negotiating and drafting that particular type of clause?  Be sure to consider both positive and negative interests, i.e., both the upside and the downside for each party.  Third, with respect to each clause, what would you add, subtract or change if you represented Contair in the proposed license from Contair to GNN of VRS technology that we have been discussing?  if you represented GNN?  Fourth, under what circumstances, if any, could you dispense with or considerably simplify a provision or clause like that shown?  Under what circumstances would you want even more detail?  Finally, if you have any questions about the meaning, purpose, or utility of any contractual language shown, please jot them down and bring them to class.  Good questions are often the beginning of wisdom.  We will spend the first half of the class session discussing these issues from the perspective of a possible Contair-GNN license agreement.

In working the problems, please take careful notes on each step in your solution, and note any questions or doubts you may have.  Be sure to consider relevant legal doctrines of IP ownership and licensing before doing so.  After reviewing highlights, risks and benefits of the standard clauses, we will spend the entire class working these problems and reviewing the relevant IP doctrines and related business and strategic considerations.
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Week 9
Tuesday, October 20:  Jay Dratler, Jr., Licensing of Intellectual Property Ch. 3.02 - 3.04, 3.06 (Law Journal Press 1994 & Supps., Westlaw on-line version); work all problems in Exercise B; Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), Chapter 8 (Contract Law Issues in Intellectual Property Licensing), up to (but not including), Part IV(C) (Licensing Agreement Prohibitions and Preemption), page 387.

This class will address the subjects of implied licenses and other contract issues in licensing.  We will spend the first part of the session working the problems in Exercise B.

Then we will conduct a thorough review of your performance on Exercise 5, discussing contract terms, interpretation, and other issues in Part 3 of Problem 5.  We will then discuss the reading material, including some principal cases, and, if time permits, the Uniform Electronic Transactions Act.

Your next graded assignment will involve the "Special UETA Problems" in Note 9 on pages 385-386.  You will present oral arguments based on these problems in teams of two or three students each.  To encourage teamwork, the members of each team will receive a single, common grade.  The oral arguments will take place in class next week, on Tuesday, November 3.  Here are the ground rules:
    1.  Each team will argue one side of one or more problems, but no team will know in advance which side of which problem it is assigned to argue.  Thus, each team will have to prepare both sides of each problem.  Only two of the four problems will be assigned for oral presentation, so each team will argue twice.
    2.  Teams and individual advocates may use the blackboard in the course of their presentations but may not write material on the board in advance.  Teams may use any notes or written aids they wish for themselves, but the judge will accept nothing in writing.
    3.  Teams will have complete discretion with regard to the order and manner of their presentations.  For example, any team may: (a) choose a single individual to present the entire argument; (b) split up each problem among the members by issue or otherwise; (c) have the entire team present as a "committee of the whole," or (d) have one individual present, with the other(s) held in "reserve" to be called up on as needed.  The method of presentation is entirely up to each team.  The judge may remain silent or may ask questions.
    4.  Each team will have a total of ten minutes to present its case and may reserve up to three of the ten minutes for rebuttal.  As is customary in court, the team representing the putative "plaintiff" will present first (Patty in Problem a, Polly (for a declaratory judgment of nonliability) in Problem b, Amazing.com (to recover payment) in Problem c, and Penelope (to rescind the transaction and to make any other claims) in Problem d).  For those problems that contain factual variations, limit your arguments to the following variations only:

      (a)  No variation.

      (b)  Assume variant (b): "Polly regularly uses the bank's website for 'on-line banking.'"

      (c)  Assume the first variant only, i.e., that Amazing.com's website allowed Duncan to print out the order but nothing else.  Do not address the remaining variants, including the possibility that Duncan might be acting as a purchasing agent for a corporation.

      (d)  Do not address the variant implied in the last question.
    (Of course you might want to consider the excluded variants and questions in preparing your arguments, but do not consider them as part of the facts of your case.)
    5.  Which team will argue which side of which problem will not be assigned until the oral argument begins.
This graded oral exercise has two purposes.  First and most obvious, it is designed to encourage you to study UETA carefully.  This statute is a harbinger of the electronic age and is likely to be with us for a long time.  Nearly all the states, including Ohio, have adopted it.

IMPORTANT NOTICE:  In preparing and making your oral arguments, please use Ohio's version of UETA, not the Model Act provided in the text.  The text's version is missing provisions that you may need to consult.  In addition, Ohio's version has substantial differences from the Model Act, some of which are relevant to the problems.   You also may wish to consult other provisions of UETA and the official commentary to UETA, as found in the 1999 model act on the NCCUSL's official Website.  However, please be sure to check for relevant differences in statutory text before relying on any "gloss" from the Comments.  (Case research is not necessary and is discouraged; there are few if any, relevant cases decided under UETA.)

The second purpose of this exercise is to develop and test your teamwork skills.  Most lawyering today—and the vast majority of license negotiation—is done in teams.  Part of the skill of teamwork is making realistic evaluations of your and your teammates' strengths and weaknesses and figuring how best to use your collective "human capital" to achieve a goal.

Based on my observations of your class performance, I have made every effort to "balance" the collective skill and experience of the teams.  Team assignments will be provided separately by e-mail.  I am providing this general information on the oral arguments today, so that you will have plenty of time to meet with your team members, in person or by telephone, to prepare for these oral exercises.  In the past, many students have found it helpful to meet before class to prepare.
 
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Week 10
Tuesday, October 27:    Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), remainder of Chapter 8, Part IV(C) (Licensing Agreement Prohibitions and Preemption), page 387, to end.  Also, before class, prepare for oral arguments on the UETA problems in the groups assigned, as described above.

We will spend the first half of the class on your oral arguments.  Then we will discuss the reading material and its implication for practical licensing.
 
This week you also may wish to begin gathering forms for end-user software license agreements from the Web or from your own collections, to see what types of terms are commonly included in end-user software license agreements and how they are drafted.  (There is no harm in consulting forms, as long as you use them only as aids to your own thinking and original drafting; problems occur when lawyers use forms without reflecting on each term.)

For your sixth writing assignment (called "Exercise 7" because the oral arguments on the UETA Problems were Exercise 6), please draft an end-user software license agreement as described in Problem 10.  Your license agreement must total no more than 750 words, and the paragraph of advice must total no more than an additional 250 words, for a strict overall limit of 1000 words for the entire assignment.  Please submit the assignment as described in Submitting Your Papers, by 5:00 P.M. EST on Tuesday, March 10.  Again, you may wish to review the Grading Criteria and Writing Hints before beginning this assignment.  You should also review your performance on earlier assignments—particularly Exercises 3 and 5—so that you can focus on any relevant areas for improving your writing, as well as on nuances of contract drafting.  Please be sure to think about your "organizational matrix," to observe the length limits strictly, and to proof your paper for inconsistencies in parties' names and missing words before submitting it.

In completing this assignment, you are permitted and indeed encouraged to look at forms.  For example, you might obtain forms from the library, the Web, or software products that you use.  You will likely find, however, that the forms provide only a starting point for your drafting.  Among other things, you will have to: (1) pick the terms to include in your license and draft any not appearing in the forms; (2) modify or redraft them for this application and to meet the word limit; (3) put the terms together into a complete and coherent legal document with a good logical and business "flow"; and (4) insure consistency throughout the document in, inter alia, the use of legal terminology and the names used to describe the parties.  As you do all this, you should also consider that your agreement will be used with a wide variety of individual consumers.  What style, tone, and level of abstraction are appropriate for such an agreement?

Last but not least, you should consider (although not necessarily discuss) the six legal regimes that are or may be applicable to the license: (1) federal copyright law; (2) UETA; (3) Article 2 of the Uniform Commercial Code (which some state courts apply to software licenses, notwithstanding the intangible character of software); (4) the common law of any state whose law may be applicable (including the law of torts and contracts); (5) any special statutory provisions or strong public policies of any state whose law may be applicable; and (6) even foreign law for consumers residing abroad.

You also should consider (but not answer as such) the following questions: Which of these legal regimes is likely to be more favorable to Contair?  to the consumer?  What, if any, difference does it make that Contair will probably market its VRS-Home software in every state and possibly foreign countries?  that items (4) and (5), and to a minor extent UCC Article 2, may vary from state to state?  Is there a tradeoff between certainty and a favorable legal regime?  Or can Contair pick and choose the legal regime it wants, for example, by "opting in" or "opting out" of UETA and other general laws?  Can Contair "opt in" or "opt out" of federal copyright law?
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Week 11
Tuesday, November 3:  Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), Chapter 9 (Antitrust Issues in Licensing), Pages 425 - 472, Leegin Creative Leather Products, Inc. v. PSKS, Inc.; Jay Dratler, Jr., Licensing of Intellectual Property (Law Journal Press 1994 & Supps.): (1) Sections 5.01, 5.02[1], 5.02[2][a] (excluding subsection [iv] on “exit” agreements) (Westlaw on-line version); (2) Chapter 5, Sections 5.02[2][b] (introduction) and [ii][A], [iii] (Westlaw on-line version).

We will spend the class session discussing the basics of antitrust law, with an introduction to their application to licensing.  In the process, we will "set up" the problems in Exercise 3, which will be your last written exercise (Exercise 8, not due next week).

In preparing the cases, be sure you understand the business circumstances in each case and why the Court ruled as it did. In each case, what did the defendant do, what economic/business effects did its conduct have, and why did the plaintiff sue?  Was the economic effect of the defendant's conduct "horizontal" (directly affecting competitors) or "vertical" (directly affecting only parties at different levels in a distribution chain, and not direct competitors)?  What rule did the Court establish generally for the particular type of conduct?  Was it the rule of reason or a rule of per-se illegality?  What were the Court's reasons for establishing the rule it selected?

We will spend much of our time discussing the cases and the distinction between "horizontal" and "vertical" relationships.  Are licensing relationships normally horizontal or vertical?  Can you tell without knowing something about the nature of the license?
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Week 12
Tuesday, November 10:  Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), Chapter 9 (Antitrust Issues in Licensing), Pages 473 - 501, 517-543; Jay Dratler, Jr., Licensing of Intellectual Property (Law Journal Press 1994 & Supps.): (1) Chapter 5, Section 5.03 (Westlaw on-line version) and Section 5.02[2][b][ii][C] (Westlaw on-line version); and (2) Chapter 7, Section 7.06 (Westlaw on-line version); work Exercise 3, preferably in groups.

Read the 1995 Licensing Guidelines as reference material for practice and Exercise 3, and as background for discussing the D.C. Circuit's decision in Microsoft III.  After catching up on any discussion left over from the last session, we will spend most of this class session discussing the Microsoft III decision and its handling of the monopolization and attempt claims against Microsoft.

Be sure to identify and note the precise elements of the monopolization and attempt claims as the court applies them.  What role did market power and market definition play in each claim, and how did the court react to the parties' arguments and assess the proof in each instance?  What specific acts of Microsoft accounted for the affirmance of Section 2 liability on appeal?  Do you agree that they were anticompetitive acts?  Why or why not?

If time permits, we will consider the main points of approach to solving each of the problems in Exercise 3, but in abstract and general terms, without actually answering the questions posed. 

Your eighth and final assignment will involve written analysis of the four problems in Exercise 3.  You will have plenty of time to work on these exercises: the deadline for submitting your papers is 5:00 P.M. EST on Tuesday, November 24.  The word limit is 750 words for the entire assignment.   As usual, please submit your paper as described in Submitting Your Papers.  Also as usual, you may wish to review the Grading Criteria and Writing Hints before beginning this assignment.  You should also review your performance on earlier assignments so that you can focus on any relevant areas for improving your writing (particularly organization) identified in the markups.

For this assignment in particular, please be sure to think about organization, the "matrix" of rules and rules of thumb for antitrust analysis, the 1995 Licensing Guidelines and examples therein, and the practical effect of the behavior described on competition and business in the real world.  You may, if you wish, cite cases that we have studied or relevant sections or examples from the 1995 Licensing Guidelines.  You will not get credit for citing other materials, although looking at other materials may help you understand the problems and write good answers.  Finally, please observe the word limit strictly and proof your paper for missing words before submitting it.
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Week 13

Tuesday, November 17:  Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), the remainder of Chapter 9 (Antitrust Issues in Licensing), pages 543 - 566, 501 - 516, and Chapter 10 (License Litigation and Trends in Judicial Enforcement) in its entirety; Jay Dratler, Jr., Licensing of Intellectual Property (Law Journal Press 1994 & Supps.), Section 5.04 (Westlaw on-line version).

The primary focus of this session will be the tying claim in Microsoft III and the doctrine of patent or copyright misuse.  In Microsoft III, what did the government allege was tied to what, and what gave the tying item its market power?  What rule did the court apply and why?  Were the court's reasons for applying that rule persuasive in light of the evidence offered?  In light of subsequent events in the computer industry and on the PC desktop?

As you read the Lasercomb decision, focus on the questions and comments in the notes; we will discuss them in class.  To help assimilate Chapter 10, please work Problem 11, preferably in groups, and take careful notes on your analysis and each step in your reasoning.  Although there is no further written assignment, class discussion will focus in part on the assigned problems, and your discussion may affect your performance grade.

In our class discussion, we will also address any general questions you may have relating to the problems in Exercise 3.  
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Week 14
Tuesday, November 24:  Coursebook (Licensing of Intellectual Property in the Digital Age, Second Edition), Chapter 13 (Bankruptcy and Security Interests in Licensing), in its entirety, and Chapter 12 (Tax Implications in Licensing Intellectual Property), pages 649-718.  Also, please work Problem 14 and Problem 13, in that order, preferably in groups.

In class we will continue with our discussion of Chapter 10 and Problem 13, as necessary.  Then we will explore the issue of bankruptcy and protecting licensees against their licensors' bankruptcy by discussing Chapter 13 and Problem 14.  We will wind up with a brief discussion of tax considerations in licensing and, if time permits, will entertain questions you may have on licensing projects in which you may have been involved.
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