Uh, there's so much going on in university licensing, both in current events and case law, that we'd just like to walk through a few provisions.

Um, that you might not have thought about customizing or changing, and try to give you some ideas for making your life a little bit easier in your licensing efforts.

So, as Ashley said, my name is Justin Crotty, I'm a partner here at Saul Ewing. My practice is in patent prosecution and licensing. I'm here with my colleague, Domingo Silva, and our friend, Deborah Perez-Fernandez, and we'll be handling this talk.

I would like to start by going over the agenda.

Oh, which is populating in an unexpected way. Um, but, uh, we'll begin with some updates in view of enhanced federal oversight of universities and their licensing efforts.

Domingo Silva will be handling the first section on export control.

I'll be saying a new word… a few words about… new… issues in bi-dual compliance.

Deborah will take the next section to discuss an innovative provision that you may.

Consider including in your template, if it isn't already there, about unexploited licensed products.

Uh, then I will take over again to discuss some new case law.

That has courts enforcing commercially reasonable efforts as part of license agreements, and then we'll discuss a little bit about what that might mean for development plans and intelligently choosing.

milestones in collaboration with your licensees. This is a pretty ambitious agenda, so this may be all we get through, if we even complete it, but as bonus objectives, if there's time, we'll return to the… or we'll discuss the definition of valid claims.

Which is always hotly negotiated. And then we'll say a few words about the definition of know-how.

Um, I'll just populate as we go along.

Perfect. Thanks, uh, Justin. Hi, um, first of all, thanks very much for attending the seminar. I'm Domingo Silva, I'm a patent attorney.

With Saul Ely, I'm the co-chair of the AP Group, and I work in the space of patent prosecution and client counseling.

Um, as Justin mentioned, the title of this seminar is One Size Doesn't Fit All.

That expression has actually different meanings, uh, within this presentation.

One of them is that, obviously, your. agreement, your license agreement template has to be, uh, prepared with the technology.

in mind, right? So the template that you may use for licensing software is clearly not going to be the same one.

that you use for licensing a small molecule. And you should have access to all these different templates within your institution.

But on another level. Uh, temp, uh, license agreement templates are life… instruments, right? You may have a template that's maybe 5 years old. It's most likely outdated.

Why is it so? Because there has been an evolution in what the courts, uh, have.

thought about licensing rights, or maybe the federal regulation has changed over time.

So, as a housekeeping item, you should strive to have those license agreements reviewed on a regular basis.

Maybe once a year, that would be a good thing. Your department should take a look at these templates.

And see if they still make sense, if some sections should be expanded, or others should be removed.

Um, a telltale sign that an agreement is outdated is that if there's a definition of a term in the definition section, but that term doesn't show up in any other section.

That clearly indicates that something has been deleted, and the document has not been edited thoroughly. It's very important.

actually, uh, especially if the license gets disputed in the future, that your document is as up-to-date and as, uh.

Clearly drafted as possible. So today, I'll be talking about a topic that was not that important a few years ago, and now it's becoming more and more important, which is export control.

Uh, you may have seen those clauses in your agreement. Most times, people don't.

Um, uh, negotiate over them. They're kind of… my… let's say, minor interest clauses, but they're actually very important these days.

Uh, export control is a general term used to.

refer to the restricted disclosure or transfer of national security.

technology to outside… to foreign companies or foreign, uh, governments.

So, that applies to specific items, technology, and information.

And what we're trying to do here, or what the U.S. Government's trying to do here, is to protect national security.

protect foreign policy interests, and also ensure that the U.S. Stays competitive.

Um, against other nations. The scope of the export control is actually pretty wide. It covers, obviously, arms and ammunition.

biological agents, some chemicals, think for example, warfare, chemicals that can be used for warfare.

advanced materials, such as modified surfaces, um. Semiconductors, uh, alloys.

any kind of material that is… has, uh, improved qualities over what's commercially available.

And also technology that has dual-use potential. So, applications that may have… investments that may have an application in civilian life, but also have an application in military life.

For example, a very resistant material that can be used for creating clothing for people, or also can be used to.

in an armor for, um, military personnel. And export control also extends to software, technical, data, and services. So you can see the scope is extremely broad.

And this is all managed by the government. It's managed by agencies such as the Department.

of state commerce and Treasury. And the key regulations come.

mostly from the Export Administration regulations. ER, or E-R-A, for commercial and military-related items.

Next slide.

So, as… as the term… implies you need to get a license before you can export an item of technology.

And the questions that you need to answer is, what's the item being exported? Is it material, software?

know how, what's a destination of the item? So, to each country, is it going to.

Who is the agent receiving the item? That's very important, because some agents may be.

companies that are linked to a foreign government. And also, what's the use for the item?

Okay? So this export control requirement applies to all individuals or organizations, including universities and the researchers.

And it applies even if you don't have federally funded research. So it's something you need to pay attention to.

You know, uh, broadly. Next slide.

So, this came to the forefront of our attention.

on September 29th of 2025. Uh, the government issues, uh, what they call a restricted party list, which are a list of countries and or companies associated with foreign, uh, sorry, it's countries or.

Companies associated with foreign countries that may create a problem of national security.

So, in the past, you can see at the bottom of the slide, this list.

Um, basically refer to some companies. But it excluded those companies that were… that were affiliated with the suspect agents, but they were not the actual suspect agents.

So, the new rule. states that any entity that is at least 50% owned by one or more entities on the entity list of the military.

And user lists will automatically be put under restriction.

Okay, so basically, if you have a company, if you're licensed technology to a company that's owned by one company… by a comp… one or more companies that's on the.

security list, that subsidiary is going to be part of the security list, or it's considered to be part of the security list.

So, it expands the scope of the companies that are affected by dysregulation.

And if you are associated with this list. you have a red flag. So.

Um, it's still… possible you may transfer technology to that company, but it would be a very hard, um… A road ahead for you.

Next slide.

So, this slide has some resources that you can use.

So, this list creates very stringent export license requirements of the parties involved.

And, um… My understanding is generally, if you're on the list, that's a no-go for the foreign, uh, for the U.S. Government.

Uh, there's a presumption of denial, which you can traverse.

But generally speaking, it would be very hard for you to get a license that allows you to export your technology to those companies.

Uh, you can… you can refer to the frequently asked questions in this first link attached to the, uh, present on the slide.

And the second link takes you to the entity list, so it's actually very well organized. It's organized by country, and you can see that a lot of the.

the companies that are listed are actually. owned or affiliated with other foreign countries.

So basically, any kind of subsidiary is affected by the new rule.

Next slide.

So, the export control creates a lot of requirements, right? Basically, you have to make sure your technology is not being exported to.

Uh, uh, uh… foreign country that is on the red list.

And that should be reflected in your license agreement. Of course, it's very hard for a university to do due diligence on this.

So it's important that on your agreement, um. in your license agreement, you have a clause there that puts the burden on the other party in the transaction, and that's what you have there.

for this, um, uh, proposed language. So the licensee and the affiliates of sub-licensees shall comply.

with all U.S. Laws and regulations controlling the export of certain commodities and technical data.

Including, without limitation, all export administration regulations, which is the ARD.

of the U.S. Department of Commerce and Performance obligations under this agreement. Among other things, these laws and regulations prohibit or require a license.

for the export of certain kinds of types of commodities and technical data to specified countries.

So that's a clause you should have in your.

license agreement puts a burden on the other party.

And I don't think it's really negotiable to take it out, because you need to make sure that the university is not ultimately fined to be liable.

or negligence for not enforcing this export control clause.

Thanks so much, Domingos. It'll be interesting to see what happens with the enforcement of these rules going forward, and to see how people act to comply.

I'm not actually even recommend, um, considering going further than this and asking your licensees to notify you if they're going to export any controlled items.

to anyone who has even a minority stake. from a restricted entity.

Yeah, there should be some kind of continuous due diligence where basically the license… the licensee.

provides the university with that kind of information, so that the university can keep track, a track record of that.

Thanks so much. Um, I cannot see questions because I am sharing slides, so, um… If there are any, shall we consider them before we move on?

I don't think there are questions. Yes.

Is there or none, yes, I can tell.

Okay. Thanks so much. I will be handling the next section. Um, I suspect that most people watching this are aware.

But on September 12th, our Commerce Secretary, Howard Lutnik, gave an interview in which he stated the view that American taxpayers should receive benefit from the licensing.

of federally funded inventions. And mentioned that using… that by Dole may be a tool.

to enforce such compliance, um… So, to be upfront.

a lot of things we said in that interview, and… It's entirely unclear at this point.

whether this is actually going to represent a change in policy.

Or whether it's simply something that was being considered at Department of Commerce, kicked around, will never actually be rolled out.

But… I'm sure that everyone is similarly aware of the interactions between the federal government and Harvard, and the government, the Department of Commerce specifically.

since Harvard a letter alleging noncompliance for a laundry list of buy-dole violations, so there has been.

some action on this, and since there's really no downside.

to checking and enhancing your BIDOL compliance in light of.

possible, uh, increased federal oversight. Um, this would be a good time to do that.

So, in particular, one of the sticking points. to be aware of.

is the preference for manufacturing in the United States.

I suspect most people are aware, but… Um… by Dole requires that, uh.

licensed product be substantially manufactured in the United States.

Uh, if commercially reasonable. Now, many universities have… a provision in their license templates, like the one on the screen right now, um… obligating manufacturer in the United States, or at least honoring the preference there.

But one of the issues that's come up, and I've been asked about, is that the federal government is now.

requiring, um, discussion of manufacturing. In i Edison utilization reports. So, it's becoming really crucial.

that universities have the right to ask. their licensees for information required to comply with this, um.

And not only have the right, but that it be done in an efficient manner.

Um, here's another similar provision, but… These were all written prior to recent events, um, and don't really go into.

giving the university the right to get the information that they need.

Pardon me. Um, so our recommendation is to fold.

If you have an existing framework. for development reports, um, to fold.

those i Edison questions and other questions regarding the preference for manufacturing.

into that structure, so that… you know, you can adopt the initial structure, uh, the existing structure of gaining information from your licensees.

So that you can comply with these new… requirements.

Thanks so much! If there are questions, uh, Debra will be taking the next section.

Don't see any questions, so good morning, everyone. I'm Deborah Perez-Fernandez. I'm the Executive Director of Technology Transfer at Rogers University.

So, um, next, I would like to talk a little bit about some clauses.

on trying to get back right, so making sure, at least, that, like.

your, uh, what you license is totally, fully exploited.

Um, this is usually something that, in our experience, gets, like, heavily negotiated.

But, like, it's particularly important when you give all fields of use, uh, to an innovation, uh, in your license grants.

Um, so next slide, maybe. Justin, so… If you don't mind. Um, so here's one example, and it really serves, like, more on unmet needs in this case, so, like, directed and making sure that, you know.

If there is an unmet need that, like, the licensee will either, like, taken upon.

themselves to try to, like, address that market, or, like.

sign a sub-license, so that that can be achieved. But more broadly, if you move to the next slide.

Um, so there are examples where you may want to actually include it, like, just generally, when you license, for example, a platform, or, like.

Just license all fields of use. You may want to have some provision that, um.

Like, make sure that in the case there is an opportunity that comes your way, uh, to, like, further.

commercialize what is already licensed, that there is a mechanism. And usually, like, obviously the licensee would have some.

prerogative on how they want to handle that, either, like, wanting to make sure that they take on, uh, themselves, that development.

or they sign a sublicense, or in some cases, like, just return it to, um.

the licensor, so the university. Obviously, sometimes that there's pushback there, because, like, people want, especially in the life science space.

They want broad fields of use. Um, and uh, one middle ground could be that, you know, if something comes up, like, trying to come to an understanding.

And making sure there is at least a discussion and of a potential mechanism.

to make sure that it's, uh… the technology or the innovation is fully exploited, and obviously understanding that sometimes one of the concerns of licensees are, like.

what is… if it is a competitor, so actually making sure there's a would-be language around, like, obviously.

Excluding competitors, or excluding competitors within the field of use were, like, the… Licensee is actually operating.

Uh, so one way too, like, to avoid all of this is actually to narrow the field of use, and, like, to really base it based on the development plan, I think.

This is a couple of times that development plans will come back in this discussion, where if you have a set of, like, really detailed development plan of what your license is trying to do.

Like, really tailor, like, the rights you are granted towards, like, the development plan. But again, uh, for, like, fundraising purposes, in the case of startups especially.

like, brother writes are often better, so, like, the needs to… try to come to a compromise there on what mechanism and, obviously, licensee understanding that.

the goal of the university is to fully exploit.

what is licensed.

Thanks so much, Deborah. I spend a lot of my time working on life sciences matters, and I think, in general, I wouldn't be.

I… and I represent licensees, um, from time to time.

And in general, I wouldn't be too concerned about seeing language like this included in a license agreement, but.

One thing that might make me encourage my client to push back is if I think that.

Um, by… allowing a sub-licensee in.

to develop a related. even if non-competing product, data might be generated that might complicate our regulatory pathway.

Have you ever encountered that situation, and how might you accommodate a licensee, or would that be a situation where you.

you wouldn't include this.

Yeah, no, I think, like, there's certainly, like, ways to include that in the language in any revisions, right? When there are concerns, like, competition is one way, but, like.

making sure, like, yeah, that the data is in a way… we've had that, whereas it was, like, even with publications, right, in other sections of the license agreement.

Anything that could be detrimental to the licensee, or, like, their carrying out their.

development plans and commercialization effort, then certainly, like, that is something that should be considered and addressed in any language.

Thanks so much. It's always a balancing act, accommodating.

the needs of licensees, but what I really like about this is that it helps universities and society in general get.

the full value of the technology that's been developed.

Um, do we have any questions, or just pause for a moment?

No questions. Okay. Thanks so much.

No questions, Tim.

So, I will handle the next section, um, and… I wanted to start by saying, if you haven't been tracking this area of the law.

It's been kind of a backwater for a long time. Commercially reasonable efforts, and.

the obligation to have diligence to use them, at least in some fashion, is a feature.

of almost every license agreement I've seen. The licensees, of course, obligated to.

to develop the product, uh, and there's some minimum standard.

of what constitutes diligence there. But last year… but courts had been really hesitant to wade into the details.

and adjudicate when a licensee. had not used commercially reasonable efforts to.

to develop the product. Um, they're just… in every case, they just seemed some reason that the court found that.

that notwithstanding their behavior. The alleged behavior, a commercially reasonable efforts had been used.

Until last year, when two cases in fairly rapid succession were published, uh, the cases I'll speak about in a moment, shareholder representative services versus Alexian Pharmaceuticals.

And Fortis Advisors vs. Johnson & Johnson. Uh, each found the licensee.

in breach of their obligation to use commercially reasonable efforts, and it… I wanted to take a few minutes to walk through these cases.

what the lessons there might be. why the court held the way they did, and… Generally, what happened?

So, we'll begin with shareholder representative services versus Alexion.

This case is about antibodies for autoimmune disease. several various indications in that.

Uh, but that was the general purpose of these antibodies, which would obviously eventually be used as.

therapeutics. So, uh, Alexion acquired the asset, uh, and began developing it.

But began to encounter hurdles to development. very early on in the process.

Uh, the promised clinical drug supply was found to be contaminated, and all of the events of this case were going on in the backdrop of the pandemic.

Um, I'm sure you can imagine the issues with trying to conduct clinical trials in 2020 when.

hospitals and facilities and businesses around the world were closing down.

Um…

Uh, and in fact, some of the clinical trials.

conducted by, uh, or started and planned by Alexion had to be paused.

due to the pandemic. Um, which ultimately even allowed.

competitors in the field to overtake Alexion, uh, Alexion's.

1830 program. Um, and become the first entrance to market in several of these indications.

Uh. At a certain point in development, Alexion for, uh… the court called them idiosyncratic reasons of corporate strategy.

Launched an initiative called 10 by 2023. Which was an attempt to bring 10 separate.

therapeutic product, uh, to market by that year. Alexey on 1830 did not make the cut.

And, in fact. In order to free up resources.

to bring those other products to market, Alexion diverted resources from the Alexion 1830 program.

However, development continued, and Alexion was ultimately acquired by AstraZeneca.

Um… with new management in charge, um… One of Alexion's clinical trials was paused.

In fact, a week even before the first dose in the study, uh, the first dose of the first patient in the study.

Um, nevertheless, another clinical trial, HP108, continued. Um, and I believe was completed.

But in the face of mixed safety data. Which ultimately was found not to be an impediment, um, and that.

production, you know, development could continue even in the face of this mixed data.

But at that point, the writing was on the wall.

and AstraZeneca, at that point, terminated the program. This is the Alexion definition of commercially reasonable efforts that was part of that agreement.

And it focuses on… The efforts and resources typically used by a similar.

Biopharmaceutical company to. Alexion, the licensee for the development and commercialization of similar products at similar developmental stages.

Alexion did have some discretion here. But… the arrangement and the way the court looked at this is that Alexion's efforts would be measured against a hypothetical.

company of similar size and scope. resources, et cetera, developing a similar product.

Um…

Alexion was found in breach. Um, the quote is actually, SRS has proven Alexion's 2020 deprioritization of Alexion 1830 fell short of the commercially reasonable efforts it had agreed to.

Um, because there was this yardstick that a court had to use.

to consider a hypothetical. similar company of similar size.

Um… they… that did not have the quote-unquote idiosyncratic corporate initiative to bring 10 other products to market.

Um, the court latched onto that and found that the deprioritization was a breach.

of Alexion's obligation to use commercially reasonable efforts. The Alexian Court actually went pretty deep and reviewed each of safety efficacy weighted pretty far into the data, and not all of these factors.

uh, weighed against Alexion. Um, but on balance, the court held them to their obligations, and the damages.

are the milestones that were allegedly missed because… Alexion did not devote the resources that they had agreed to to this product.

The next case is about surgical robots in Fortis Advisors LLC v. Johnson & Johnson.

Um, and in this case, the licensee actually had a lot of leverage, because Johnson & Johnson considered.

entering the surgical robot marketplace, uh, to be vital to their corporate strategy.

But Johnson & Johnson's existing surgical robot, called VERB.

was falling increasingly behind schedule. And to solve this, they looked to a startup in the space which had been very successful in developing a rival.

Surgical robot platform called iPlatform. So, consider this in the context of the licensee had leverage and was able to ask for, um.

a rather licensed sore. friendly, uh, set of provisions defining commercially reasonable efforts, because.

They got two key… features are two key.

benefits in this license agreement. The first is that the licensed surgical robot would be treated as a quote-unquote priority medical device, which was an internal term with a meaning in Johnson & Johnson.

And second, and crucially. Uh, Johnson & Johnson wasn't just obligated to develop the surgical platform, they were… obligated to use commercially reasonable efforts.

befitting a priority medical device in furtherance of the milestones.

The court wrote that J&J's promise to Oris was broken almost immediately after closing.

Um, instead of developing the iPlatform independently. uh, the Johnson & Johnson… thrust the i platform and their existing robot into what the court, and I suppose, at some point, the iPlatform team referred to as a surgical robot bake-off.

In which these two platforms competed to show which one would be.

the most efficacious and promising of further development.

My platform actually was found to be the winner, that it was found to be the more promising platform by Johnson & Johnson, but rather than scrapping Verb.

and developing… iPlatform independently.

The two products were combined. Which, allegedly, and the court seemed to accept.

ruin the morale of the iPlatform team, because Verve's team was added into.

iPlatforms team, and they were forced to adopt. features for VERB into the iPlatform, which slowed development and hindered their efforts to meet the milestones.

This, according to the Fortis court, uh, was a breach.

of Johnson & Johnson's obligation to use commercially reasonable efforts to develop.

i platform, because if you're going to treat something as a priority medical device, um.

And this could be defined because there was a comparator product in Johnson & Johnson.

It should be developed independently. Um, and even though Johnson & Johnson developed, uh, devoted.

very substantial resources to the program. It was in furtherance, according to the court.

of developing their surgical robot platform and their business.

Generally, rather than specifically in pursuit of the milestones as they were obligated to do by their agreement.

The comparator product, the other… Uh, priority medical device was not subjected to any of this behavior, um, and.

In the end, um, Johnson & Johnson was liable for missing several of the milestones that they had.

agreed to in their agreement.

So… I think the lessons here are fairly… obvious, um, that if you can get something.

uh, like Oris did. in your license agreement, and there exists some miles, um, some yardstick that you can get to define.

commercially reasonable efforts, um, at least in the instance of Fortis, it was very useful to the licensor.

But for universities, knowing that courts. may be more aggressive in enforcing commercially reasonable efforts and awarding damages for failure to do so.

Your license agreement should be crystal clear. that, as a licensor, you are entitled to.

Sublicensing revenue. for milestones, even if… your sub… your licensee has to sue your sub-licensees to get them awarded.

So, this was in the SAL template, and in light of these cases, I'm going to see to it that we add the following sentence, that for the avoidance of doubt, sublicensing revenue.

shall include revenue from judgments obtained against a sub-licensee for breach of their sublicense in connection with any of the foregoing.

Um, which would include milestone payments, or royalties, or anything like that. Just because your licensee has to sue to get the revenues, you should still be.

entitled to your share.

Um, are there any questions, or… Responses? No questions?

There is, um, looks like one in the chat.

Yeah, um, the question is, are there examples of what constitutes commercial reasonable efforts for different types of technology?

how is reasonable determined for emerging technology areas such as AI?

Well, that's a good question. So… Unfortunately, like so much of what we do in licensing, because we're dealing with developing technologies, we're really at the forefront, and there aren't a whole lot of.

examples that we can turn to. But I would direct your… attention, um… to the definition of commercially reasonable efforts in your license agreement. You can always fall back on the hypothetical company framework.

But if you can bring out any comparators, um, or find anything concrete to latch onto, that seems like it's going to be very helpful.

And if I may add, too, I think in com… as a companion to adding commercially reasonable effort, I think it's important to.

Add some specific dirigence milestone as well that you base on your development plan.

Uh, like, to make sure that, like, you know, you have, like, something concrete as well to fall back on.

Like, it's kind of, like, almost like… double safety here.

Uh, making sure that people really develop your. what you are licensing to them.

Um, I'm getting better at this. I found out how to turn on the questions.

Would you expect the legal fees to be shared by the university parties, or just the licensee?

If the original licensor is entitled to sublicensing revenue in this example.

So I'm not entirely sure what you mean, as in whether this is, uh, if the licensee is able to recover.

their, um… their legal fees from their sub-licensee.

Uh, or if you mean that the university would join in the enforcement.

and share in some of those costs, so I can address both briefly.

Um, there should be a section in… Um, there may be a section in your agreement which… We'll control this. Often there is for patent infringement, but for breach of contract, I'm not sure that I've seen it.

And the default would be… that the university would not… be on the hook for those, um… for the legal costs of enforcing this sublicense.

Um, in the event that… Um, attorney's fees were awarded to the university licensee from the sub-licensee.

At least the way I've framed it in our updated sub-licensing.

revenue definition, you probably wouldn't get those. Because the way I've set it up, um… the… the portion that the university is entitled to are the payments that they would have had if they had been fairly paid, so…

If a milestone, um, was reached, and the licensee is paid, the university should get a portion of that.

But that, in this definition, that doesn't include attorney's fees.

In view of this, um. Deborah Domingos, anything you would think about, uh, in designing milestones?

Do you think you… have you been in situations where you might have the leverage to direct commercially reasonable efforts?

strictly, or to achieving milestones, rather than just developing the product. I'm not sure that I have, because that is an enviable position to be in.

I have not been in that position, but again, like, we do rely heavily on our, like, specific diligence milestone with.

timelines based on the development plan that they provide, the licensee provides.

As a patent attorney, the development plan, it's usually just presented to me by the client, whether that's the licensee or in collaboration with the university, so I don't… really get to work on that. Um… Is there anything you would share about writing a good one? Any tips, or…

tips to avoid?

Well, I think the more clarity anyone who licenses, like, especially in the case of startups, right, that's where it's… often very, very important, is, like, to have a good sense of, like, what the plans are, and it's understood that those.

the plans may change. So, like, even when we do… we have, like, our set of, like, diligence milestones.

There is some, like, flexibility, like, for example, timelines change, or, like.

There is a need for amendments, like, obviously, it's in everyone's interest to work together, like, to make sure that everyone is aligned.

Um, and sometimes we even, like. have extensions built in, like, some that are for free, and some that would be… like, uh, for a fee.

to make sure that, like, people can comply. But, like, I do think… This is just comfort too, like, it's important to understand that at the outset of the licensing what is going to happen to what is licensed, so…

having those kind of… and they can be short-term, like, development plan, right?

Everyone understand that sometimes 5, 10, 15 years plans, those, like, may take time.

But, like, um, I think it's good for everyone to go through this exercise and understand that, and then.

have realistic, and the… shouldn't be, like, sometimes the development plan is far more detailed than what would be used in the diligent milestones, right? You don't want to.

overburden everyone by trying to tracking so many different things, but I do think it's important. And in the case of stardens.

There should be two, like, development plan, as well as, like, fundraising milestones, because.

That's also something that, as a licensor, you would like to understand.

What's the plan in terms of fundraising, so…

Mm-hmm. Yeah, when I've… I mean, it's not uncommon for me to be representing a licensee who's had to return to the university for sometimes multiple times.

to amend the development plan, usually for timing, but sometimes for change in plan.

Um, and I've been pleased that universities have been very reasonable about granting that, but… maybe for that reason, because there is pressure to, um… to be reasonable, because everyone wants this venture to succeed, it's a good idea to include both free and paid extensions.

Uh, John Puzis made a comment that I wanted to highlight, that our list of, um.

items for sub-licensing revenue maybe should include sale of priority vouchers for clinical development.

Um, those can potentially be a lot of money, and it is… derived directly from the technology, so we will certainly consider doing that, and I urge others to do the same.

Um. We have about 15 minutes left. I don't know if we need to pause for any additional questions, or if anyone has a topic we'd like to return to. We have a few more slides.

Yeah, I think we can cover a valid claim.

Dominguez, Deborah, do you think we should press on, or… I see…

be a little aggressive. Yeah.

Absolutely. And if there's a question in the meantime, like, feel free to… Ask any questions.

Yeah, I'll be monitoring the questions in case something comes up.

Great. So, I think the definition of valid claim is something I've spent more time negotiating in university license agreements than.

Um, I have anything else. People tend to just be very picky about.

what constitutes a valid claim in the absence of an issued patent.

This, of course, goes to the situation where there's a patent application.

That, with the claim that covers the product, but it hasn't actually been issued yet, um.

And… the way we handle valid claim, and most… the way most people do, uh, that's included, but… the period of years is… you know, sort of just haggling, um… But I urge people to consider also when it would actually start.

Um, like everything in the federal government right now.

the USPTO is going through a lot of changes. New examiner positions are non-bargaining unit positions, they're outside of their.

outside of their union, essentially, we'll see if that makes them less appealing.

Um, and… there has been some push for examiners to return to office. Um, it's… not very popular among examiners, so there is some possibility.

that pendency times before examining, uh, before applications are examined is going to extend, and there's not really much you can do about your past license agreements, but going forward, you may want to consider.

making the date where the pair eat of years, where an unissued claim in an unissued.

patent application will count as a valid claim, start from the first substantive office action rather than filing date.

licensees are likely to push back on it, but… If, um, you're measuring from the filing date, and the patent application, at least at the USPTO.

Um, takes far more years than expected. It's much more likely that there's going to be a lag time.

In between where your valid claim period. And, because it simply hasn't been picked up, and therefore hasn't been issued, and when the claim actually issues. And it can be a complication to go back.

Uh, even if you're, um… definition includes a catch-up in revenues when the claim is actually issued.

Um, so it may be something for people to bear in mind going forward.

Dominguez, you do even more patent prosecution than I do. Is that your view of how things are at the USPTO right now, or is there anything to add to that?

Um, it depends who you ask. You may have seen in the news that they expanded the Track 1 program.

Because people really, you know. People have warmed up to the possibility of having examinations sped up by paying a reasonably affordable fee.

On the other hand, we also see that some applications are just lingering, and it's taken a little longer than normal for prosecution to happen, even in a Track 1.

filing, so… At this moment, it seems like the process has slowed down.

Um, at least from the. just a few cases I have dealt with.

Yeah, I haven't seen, um… this… it's anecdotal for me as well, I haven't seen a real breakdown, um.

of any data about pendency times increasing. Um, but that's the way it seemed to me.

The last thing I have for today, um, it's just an interesting way of handling.

Um, know-how product. Um, this, of course, are products that are not covered by a claim in a patent application, and usually involve a royalty step-down.

Um, often to about half of the usual. Royalty rate for net sales.

I was involved in a license agreement where, for… they're an idiosyncratic reasons, the licensee really didn't want to have a royalty step down.

Um, which, you know, of course, the university did, but they reached a really interesting compromise.

Uh, which is that there would be no know-how products, it's only subject.

to… royalties are only due on products covered by a valid claim.

But they base that valid claim in the United States, even on sales outside of that territory.

Um, I had never seen anything before, and it seemed like both parties came away actually pretty happy with the arrangement.

although I certainly don't think the university would apply that in all cases, and it is in the context of a licensee.

who, while it was certainly an arm's-length transaction, had sponsored an awful lot of research prior to the signing of the license agreement.

Yeah, I think, like, if the net sales includes, like, products, like, licensed products includes, like.

things that are not covered by patents outside, like, I've seen that, and usually, though, like.

Licensee would want to include something provided that, you know.

This is not some competitors that enter the market and.

fully, like, destroys their advantage there, so there can be some limits on, like, you know.

provided they are, like, 50% market share, or whatever that might be, and obviously there's a lot of definitions that enter into that.

I think for NoHub products, there's a couple of distinctions, though, like, between tangible products, and then, like.

like, things that are more, like. protocols and, like, non-patented, really, items.

Uh, so I think what is key in our experience, we try to always get, like.

like, varieties, obviously, on, like, um… technology, we call that, rather than know-how.

But, um, it's very, very important if you want to rely on it, especially beyond patent expiration, that you have a good.

description of what that know-how is. So… Like, so making sure that it's fully documented, rather than anything that can be useful to practice.

the patents, or, like, the patented products, so… so I think that… that would be my comment on… And this section.

Great. Okay, well, I believe that's all we have, so I think we're gonna end just a little bit early, but we have a few minutes for further questions, if there are any.

Yes, uh, Justin, somebody's asking what NVCA stands for.

Yeah.

Oh, thanks so much. Um, that was a bit of an oversight on my part. Nvca stands for the National Venture Capital Association.

Um, and the reason it's pertinent here is that they publish a license agreement template.

called, uh, the one that I use, because I am a life sciences guy, is the Biotech Outlicensing template, or, uh, simply the Bolt.

Um, and because it's, you know, it's publicly available and, uh, you know.

people, sometimes, people often start with it for transactions. Uh, it's useful to use it as an example in talks like this.

And then there's a question on, can you speak to the issue of enforcement of know-how?

Hmm.

Well, um, I mean, for one thing, it's… it's never easy, and can obviously strain a relationship with your licensee if you feel like they are… designating products.

Um, as not know-how products when they're taking advantage of the university's know-how.

Um. One thing I would highlight, uh, is to ask for reports from your licensees in development, um, and even to try to.

keep abreast of what's going on with them in publicly available information.

Um, but it's… to be candid, it's not… an area where I have a great deal of experience.

Yeah, I think, as I said, like, what would really help is, like, to have this clear description.

So, it's something you can rely on if you wanted to. Obviously, when it's tangible materials, I think it's… It should be. I would say easier to, like, uh… Demonstrate, but, like, having, like, solid description and clarity at the outset.

So that both parties, that it was really… a thoughtful discussion, I think, would be helpful.

Again, no experience in terms of reinforcement, but… But that would be my recommendation.

Yeah. It might be, I mean… there are always so many demands on faculty's times, but it might be a useful topic to educate faculty about.

to at least keep abreast of what they're… telling licensees, if they're speaking with them, and information that's being transmitted.

And I think there's an additional, uh. question, I think it's on a different… tab that, like, do you agree that this is commercially reasonable effort cases are going to be quite.

backed into Ancievin, such lower court opinions are unlikely to be re… appealed. I was somewhat surprised by the elections court's decision, given the facts, at least as presented.

Can you also provide the sites for… these two cases discussed.

Um. They are going to be quite fact-intensive.

Uh, and then… well, or at least in these two cases, there were. In earlier cases, courts seemed to have less of an appetite to wade into the details about this.

But, um, it is certainly going to be pretty idiosyncratic to every.

situation going forward. But just to see that it is a possibility, and one thing I didn't highlight while I was talking is that.

the damages in SRS, um… are in the hundreds of millions of dollars, and in Fortis, it… I believe it's in the billions, there's a lot of money.

They will certainly be appealed, it will be very interesting to see how.

Um… The appeals court handles that going forward.

Um, as for the sites, uh, I… I mean, I… other than copying… Um, Ashley, is there a way to put that on the webpage for this talk?

Oh, great, okay. Yeah.

Yes, absolutely. If you want to send me that information, I can link it, um, with all the other resources. Well, with the slides, absolutely.

Okay, great. We'll do that.

And I see one more question. How do you manage know-how via licensing? If the inventory is also involved in the startup?

that is licensing the know-how.

I will go from the university perspective, obviously, that's always a tricky situation to handle.

It should be managed through, like, conflict of interest.

And, like, having clarity and, like, a lot of… education on… what constitutes, like.

university intellectual property. Um, but, like, it is something that needs to be clearly, uh, carefully managed in any, like, config of interest.

management plan, I would say.

One situation that I was involved in as the prosecuting attorney on patents.

subject to a license agreement where the founder left the university and went to the startup.

was that the university put. a great deal of effort into having the inventor commit everything to a list and to document all tangible materials that existed as of the specific date he moved from the university to the startup, such that everything before.

was university know-how, and then everything he generated afterwards.

Um, was simply the property of the startup. So that, for the most part, worked very well, although it's a complicated situation.

Um, and I wouldn't… if there is such a transition, I would encourage people's attention.

to that, to do the same.

Yeah, I think documenting technology transfer is very important. I'm not saying it's easy, it's a contract, it's very difficult.

But if you document all those instances where. discussions were had, and maybe know how it was transferred, it puts you at a stronger position to.

assert that know-how came from the inventor, was not developed by the.

accompany itself. But it's tough. It's not easy.