(Second Edition)

Kenneth L. Port,  Jay Dratler, Jr.,  Faye M. Hammersley, Esq.,  Terence P. McElwee,
Charles R. McManis, and Barbara A. Wrigley

On-Line Problem Supplement
Copyright © 2005, 2008   Carolina Academic Press.   For permission, see CMI.

Exercise A: Problems in Licensing Scope and Strategy

1.  Multimedia production.   A YouTube phenomenon in a foreign country has developed a multimedia production from live performances of herself and her friends, clips downloaded from the Internet, “sampling” from CDs she bought, and pictures of her own and her friends’ artistry.   The clip is about ten minutes long, and it’s terribly funny.   Your client wants to post the clip on his own Website.   What advice would you give?   Could you think of any ways to save your client money?

2.  Importation of electronic device.   Your client is a California distributor of consumer electronic devices.   It would like to handle a new patented device, made in Korea, with software designed in the U.S.   The manufacturer would require the distributor to do final assembly in California, as well as to load and initialize the software from a master disk.   Doing all this would require your client to purchase special equipment and to hire one or possibly two additional employees and train them to perform these functions.   Your client will need to license patents, copyrights and confidential information for this purpose.   What scope of license would you advise your client to request?   What other terms would you expect to see in a draft from the manufacturer, and how would you advise your client to respond?

3.   Exportation of catalyst.  Your client has developed a chemical catalyst that can be used in a wide range of chemical reactions to make a wide range of different products.   Patents on the catalyst and methods of using it are pending in the United States and major foreign jurisdictions.   Meanwhile, your client is protecting the catalyst and its use as confidential information and trade secrets.   In response to general advertisements in chemical-industry trade journals, your client has received inquiries from: (1) a multinational pharmaceutical company regarding use in making drugs; (2) a U.S. consumer-products company regarding use in making cosmetics; (3) an California company regarding use in making paints; and (4) a European university regarding use in scientific research.   What scope of license would you advise your client to suggest in its first proposal to each of these prospective licensees?   What requests or demands would you expect each of the four to make and why?

4.   Distribution of cinematographic film.   Your client is an independent Washington film producer known for low-budget “artsy” films.   Its latest film won a prize at the Cannes Film Festival.   Now many major film distributors are seeking rights to market the film in the United States and abroad.  What licensing strategy would you advise your client to take?

5.   University biotechnology assay.  Your client is a major research university, which owns all rights to a biotechnological method developed by a Nobel-prize winning scientist.   The method can detect the presence of microbes and viruses in small samples of body fluids with astounding accuracy, low cost and speed.   A U.S. patent application on the method was filed ten months ago.  Requests for licenses have been received from commercial firms and universities all over the world.   Insofar as scope is concerned, what licensing strategy would you recommend and why?  Would you give your client any other advice?

6.   Drafting restraints effectively.   In Exercise 4 above (Distribution of Cinematographic Film), your client has decided to license a major multinational movie distributor to manufacture and sell DVDs of the licensed film in the European Union only.   If the license defines its subject as “the Film,” describe how you would draft the granting clause to impose the rights and territorial restraints most effectively from a legal standpoint.

7.  Trademarked beverage license.  Your client is an Australian soft-drink manufacturer.   Its new drink, sold under the trademark “Coolabong,” in icy blue script, is a sensation.  Patent are pending on the drink in Australia and major international jurisdictions, and the trademark was registered in Australia three months ago.   Many soft-drink makers have asked for licenses to make and sell the drink.   Insofar as scope is concerned, what should be your client’s licensing strategy?   What special problems might you expect to arise, and how would you solve them?

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