Question
From: (REDACTED)
Sent: Monday, July 14, 20084:18 PM
To: Verne, B. Michael
Subject: Anotherstumper
Michael: Here'sanother question that I don't think I've ever encountered before.
Suppose that twocompanies will form a non-corporate joint venture. One of them will havecontrol of the venture. The other forming party contributes certainintellectual property to the venture. Because the venture will utilize thatintellectual property in only one particular field of use, the venture grantsback to the contributing party a worldwide, perpetual, royalty free, exclusivelicense to utilize the intellectual property in any field of use outside thatin which the venture will operate.
Assume that we candetermine the appropriate value of the IP being contributed (although there aresome potentially interesting questions there), and therefore we can determinewhether the forming party that will have the majority interest has to make an801.50 filing.
My questionrelates to the "exclusive license" that the minority party takes backin connection with its contribution. This looks a bit like an intra-personexemption (i.e., minority partner grants itself an exclusive license). Thatdoesn't seem right, however, as the license is coming from the venture, andtherefore from its controlling partner.
I recognize thatif the minority party had instead granted the JV an exclusive license, limitedto the venture's field of use, that would be an asset acquisition, susceptibleof valuation, and retention of the residual rights by the minority partywouldn't raise any issues. But here for some reason the parties want to conveythe IP to the venture in toto, and then grant back an exclusive license.
I come out thatthe grant back is potentially reportable by the minority party as an assetacquisition that is not viewed as an integral part of the formation transactionand is therefore potentially separately reportable.
Have you areaction?