An intellectual property license, well developed in favour of the licensor, usually contains a provision allowing the licensor to terminate the license in the event of the licensee`s insolvency. These provisions are particularly important for exclusive licenses, for which the licensee is the sole source of revenue from the technology. Therefore, parties to long-term agreements tend to have many ongoing obligations with one another. Some of these commitments (e.g. B commitments to cooperate in research and development) expire at the end of the agreement. Other obligations may be maintained for a limited period of time (e.g. B confidentiality obligations). Other obligations may remain indefinitely (e.g. B compensation obligations). In addition, there may be new obligations that will only come into force in the event of termination, for example.B. an obligation to cancel the registration of licences with national patent offices or trademark registers. It is important to ensure that denunciation can only take place by written notification and that it is established at the time of entry into force of termination; either immediately or within a certain number of days.
In Butters vs. BBC Worldwide , the Court of Appeal confirmed that a provision allowing an intellectual property licensor (or licensor) to terminate a licence in the event of a licensee`s insolvency is enforceable and is not contrary to insolvency law. It is obviously important, when drawing up the agreement, to obtain the opinion of a lawyer specialized in the field of industrial property. When agreeing on termination clauses, you should take into account the following points in advance: All this is part of the detailed and meticulous work of a contract writer. If a lawyer is responsible for the development of all the projects and the final version of the contract, the commercial parties can leave this work to him. If business parties choose to create projects without a lawyer, they need to make sure they have the same cautious approach as their lawyer. It may seem strange to say that the consequences of termination are one of the key concepts of an IP contract. This topic is rarely present in term sheets or in early trade negotiations. As a rule, termination is dealt with in two clauses: the first defines the respective termination rights of the parties; the second rules the consequences of termination. Do not think that these two provisions should be the same for all parties. Instead, they should be tailored to the circumstances of the transaction, taking into account the financial and other risks borne by each of the parties, as well as their respective negotiating strength.
This decision reminds those negotiating IP licenses to actively consider what will happen to a license if the agreement is terminated and to ensure that the contract reflects that intention. This is particularly important for perpetual licenses and licenses that, under certain conditions, are declared functional. Explicit handling of the issue, for example in a termination clause, ensures that there is no doubt about the intentions of the parties and minimizes the risk of a subsequent dispute. There are other forms of compensation for ip complaint violations that are not available as part of a violation complaint after an IP license is terminated. With respect to the IP, the applicant has the option of claiming a profit account3 that allows him to recover the former licensee`s net profits on his illicit sales. . . .