CLP Licensing Negotiations & Deal Structuring Flashcards

In licensing negotiations, BATNA stands for:

Answer: Best Alternative to a Negotiated Agreement

BATNA is the best outcome a party can achieve if negotiations fail, and knowing it sets the minimum acceptable deal threshold.

Which deal structure element allows a licensor to recapture rights if the licensee fails to meet agreed commercialization benchmarks?

Answer: Diligence obligations with reversion right

Diligence obligations require the licensee to actively develop and commercialize the IP; failure triggers a reversion right returning exclusivity or all rights to the licensor.

A 'most-favored licensee' (MFL) clause in a license agreement obligates the licensor to:

Answer: Offer the same or better terms to the MFL holder if a more favorable deal is later granted to another licensee

An MFL clause ensures the existing licensee automatically receives any better terms the licensor grants to future licensees in a comparable situation.

What is the primary purpose of a term sheet in a licensing negotiation?

Answer: To capture agreed key business terms before drafting a full binding agreement

A term sheet summarizes the principal economic and legal terms agreed upon in negotiation, serving as the blueprint for the final license agreement.

In a cross-license agreement, parties exchange:

Answer: Rights to each other's IP portfolios, typically without cash payment

A cross-license allows two parties to use each other's patents, which is common in industries where both hold blocking IP necessary for product development.

What is a grant-back clause in a license agreement?

Answer: A provision requiring the licensee to license back to the licensor any improvements made to the licensed technology

A grant-back clause obligates the licensee to share or license back improvements to the original licensor, which can be exclusive or non-exclusive.