BASIC LICENSING

SUMMER 1995

INTELLECTUAL PROPERTY SUMMER INSTITUTE

PROFESSOR KARL F. JORDA

FINAL EXAMINATION

 

This is a two-hour (three hours for foreign students), open-book exam. You may consult the course books and any other materials. Yet, your examination must be your own work. Do not discuss it with other students.

Write your answers in the blue books supplied, but please use only one side of the page and observe the margins. Please write legibly.

Grading will be anonymous; please do not put your name on anything you turn in. USE YOUR EXAMINATION NUMBER.

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PROBLEM I

A. Facts

A gourmet cook who is also an amateur chemist and a tinkerer, has come up with a novel formula for flavoring tablets that can make a cup of coffee taste like you just ground the beans. She wants to sell or license her formula to a big food products company like RJR Nabisco. If a big corporation has no interest in it, she will try to sell or license it to someone regional. She plans to start contacting these companies soon. However, she is concerned that when she discloses her formula to companies, they will steal it. She is not sure it is patentable, and it might not be a trade secret, either.

B. Question

What can she do to protect herself in her dealings with any of these companies? [15 points]

PROBLEM II

A. Facts

ACE Corporation entered into an oral agreement pursuant to which ACME Corporation was permitted to use ACE's trademark on goods manufactured and sold by ACME. At least 90% of the components for ACME's goods were manufactured by ACE. ACE told ACME that if ACME chose to use its own parts, ACE wanted to know about it. ACE tested parts of ACME's goods. Further, ACE had been associated with ACME for over ten years and respected its ability and expertise. ACE never received any complaints about ACME's goods. Subsequently, the parties had an irreconcilable disagreement about royalties and ended up in court with ACE suing ACME for breach of contract. In defending itself, ACME contended that the agreement between them was a naked license and hence unenforceable.

B. Question

How should the court rule in this situation and why? [15 points]

PROBLEM III

A. Facts

Pinnacle Inc. brought suit against Triumph Corp. and John Doe for patent infringement. Doe had invented a certain fabric and a method for producing it while he was an employee of Pinnacle. In connection with the filing of a patent application on his invention, Doe (1) assigned all right, title and interest in his patent rights to Pinnacle for one dollar and other valuable consideration, and (2) signed a Declaration and Power of Attorney stating his belief in the patentability of his invention.

Subsequently, Doe left the employ of Pinnacle and founded Triumph and competed with Pinnacle. In their response to Pinnacle's complaint, Triumph raised several defenses alleging that the patent in suit was invalid. Pinnacle moved that these defenses be stricken.

B. Question

How should the court rule on this motion and why? [15 points]

 

PROBLEM IV

1. In lieu of or in addition to a Òbest effortsÓ clause, what other provisions could a Licensor propose so as to achieve the objective behind a Òbest effortsÓ clause? [5 points]

2. Can IP misuse be rectified? If so, how? What is the effect of any such rectification and as of when is it effective? [5 points]

3. What are the differences between IP misuse and an antitrust violation? [5 points]

4. When does a trademark license become a franchise and what, if any, difference does that make? [5 points]

5. What parameters and limitations should a Òmost-favored licenseeÓ (MFL) clause have to be fair and equitable to all involved parties? In what kind of license is a MFL clause found and what is the rationale behind such a clause? [5 points]

 

END OF EXAMINATION

KFJ/Ruh/7.12.95