Patent contracts: licence, assignment, co-ownership

A patent contract is drafted with the dispute it must avoid, or win, in mind. The firm works on agreements that transfer, share or exploit patents and know-how, at the negotiation stage as well as in litigation over their performance.

A technology transfer is not limited to the patent itself. A technology transfer agreement may combine a licence or assignment, disclosure of know-how, technical documentation, assistance and rules governing improvements and new applications. We ensure that the rights transferred, permitted uses, confidentiality, evidence of delivery and the treatment of future results are clearly identified.

• Licence agreement, exclusive or non-exclusive, portfolio licences and cross-licences.
• Patent assignment and partial assignment, by territory or by field of use.
• Co-ownership agreement between co-applicants, laboratories and industrial partners.
• Non-disclosure and know-how communication agreements, aligned with the protection of trade secrets.
• Research, consortium and technology transfer agreements, including the allocation of results.
• Intellectual property clauses in employment contracts and the handling of employee inventions.
• Undertakings given to a standards body and negotiation of FRAND licences on standard essential patents.

Two rules of form govern the effectiveness of the transaction. Assignments and licences alike must be recorded in writing on pain of nullity (art. L. 613-8 of the French Intellectual Property Code). The act is then enforceable against third parties only once it has been recorded in the national patent register kept by the INPI (art. L. 613-9), subject to third parties who were aware of the act when they acquired their rights.

For a European title, assignment of the application is governed by Article 72 EPC: it must be made in writing and requires the signature of the parties to the contract. A failure to record is paid for at the moment of suing, when the defendant to the infringement action challenges the standing of the assignee or of the licensee.

Articles L. 613-29 to L. 613-31 of the Intellectual Property Code organise the co-ownership of an application or of a patent: personal working by each co-owner subject to fair compensation of those who do not work the invention, an infringement action open to a single co-owner subject to notice to the others, a non-exclusive licence conditional on an offer to assign the granting co-owner's share, an exclusive licence subject to the agreement of the other co-owners or to judicial authorisation, and a pre-emption right where a share is assigned.

That regime is merely a default. Article L. 613-32 allows the co-owners to depart from it at any time by a co-ownership agreement. It is that document, and not the code, which will in practice decide who steers extensions and prosecution, who pays the renewal fees, who runs the infringement action, and on what key royalties and damages are shared.

A handful of provisions alone make the value of the contract on the day of disagreement: the royalty base and its method of calculation, the audit right and its contractual time limit, the warranty against eviction, the allocation of the conduct of actions and of their costs, the notice of termination, the governing law and the chosen forum.

On the fate of royalties, the Court of Justice has held that a royalty may remain due for the period of use of the technology, even though the patent is later revoked or held not infringed, provided the licensee was free to terminate the contract on reasonable notice (CJEU, 7 July 2016, Genentech, C-567/14). The termination clause then becomes the licensee's real protection, well ahead of the warranty clause.

The Paris Judicial Court has exclusive jurisdiction over patent actions, including where they raise both a patent question and a related question of unfair competition (art. L. 615-17 of the Intellectual Property Code). A purely contractual dispute, by contrast, follows the ordinary rules of jurisdiction and the jurisdiction clause agreed between the parties, until the moment the validity or the scope of the title is put in issue.

The Unified Patent Court does not hear purely contractual actions: the list of its competences, in Article 32 of the Agreement, does not cover licence disputes as such, even though the FRAND defence is argued before it within an infringement action. Article L. 615-17 also expressly preserves recourse to arbitration, under the conditions of Articles 2059 and 2060 of the Civil Code: for multi-territorial licences it is often the faster and the more discreet route, as set out on our page on arbitration and mediation in patent matters.

A licence to be negotiated before entering a standard, a deadlocked co-ownership, a licensee who stops paying, an assignor who warrants poorly what it has sold: the earlier the firm is instructed, the more options remain open. Tell us about your situation.

Les questions de titularité et de contrats de recherche sont aussi examinées dans notre due diligence en propriété intellectuelle et notre programme portefeuille de brevets défendable.