Question
From: (REDACTED)
Sent: Thursday, July 10, 2008 3:25 PM
To: Verne, B. Michael; Berg, Karen E.
Cc: (REDACTED)
Subject: RE: IP
Hi Mike and Karen.
Weappreciate your advice on the telephone today about the proper HSR analysis ofan IP collaboration agreement. We are writing to confirm that analysis.
Aswe discussed A and B are planning to enter into a collaboration agreement underwhich they will collaborate for the development, manufacture, and sale of a newproduct (the "New Product"). A and B will jointly own any new IParising from the joint collaboration (the "Developed Technology").
Awill be responsible under the collaboration agreement. for the manufacture andsale of the New Product. The parties had thought about B giving A an exclusivelicense during the term of the collaboration 10 B's undivided joint ownership interestsin the Developed Technology to make, use, sell, and import the New Product. Ofcourse, this would be the exclusive grant of IP rights from B 10 A and would thereforeneed to be valued under the HSR Act. a very difficult and speculative task in thiscase, to determine if the grant would be HSR reportable.
Anotheroption the parties have considered is for B to covenant in the collaborationagreement that during the term of such agreement it will not license its undividedjoint ownership interests in the Developed Technology to anyone to make, use,sell, and import the New Product, nor will it utilize its undivided jointownership interests in the Developed Technology to make, use, sell, and importthe New Product, unless A were nol able to meet its obligations under thecollaboration agreement. We understand that lf the parties opt for thisapproach instead of the exclusive license described above, it would not benecessary to value the IP at issue and no HSR filing obligation would arise. Wealso understand that this approach would not be considered a device foravoidance.
Finally,should either party commit a material breach under the collaboration agreementthe non-breaching party would be entitled to exercise exclusive rights underthe breaching party's undivided joint ownership interest in the DevelopedTechnology to make, use, sell, etc., the New Product. We understand that thisprovision does not create a potentially reportable license now and should oneparty breach !he collaboration agreement in the future would not create a HSRreportable license at that lime. This is because it is unknown whether eitherparty will breach and if a party did breach, the other party would acquireexclusive rights to IP through no act of its own.
Pleaselet us know if we have miss characterized your advice.