Ethical Practices in Licensing Flashcards

A licensing professional learns that a licensee is sublicensing the technology to a third party without authorization. What is the FIRST ethical obligation?

Answer: Notify the licensor and document the violation

The ethical duty is to notify the licensor and document the unauthorized sublicense, allowing proper remediation before escalating to termination.

Under the LES (Licensing Executives Society) Code of Ethics, a member must avoid situations where personal interests conflict with those of their client. This principle is best described as:

Answer: Avoiding conflicts of interest

Avoiding conflicts of interest is the core LES ethical principle that requires members to separate personal gain from client obligations.

A CLP professional is asked to value a patent portfolio for both the buyer and seller in the same transaction. The most ethical course of action is to:

Answer: Decline the dual engagement to avoid a conflict of interest

Serving both sides of a transaction creates an inherent conflict of interest, and declining the dual engagement is the ethically sound decision.

Which practice BEST demonstrates ethical conduct when a licensee reports a potential invalidating prior art for a licensed patent?

Answer: Disclose the prior art to the patent office if material

Candor to the patent office is a legal and ethical duty; material prior art must be disclosed regardless of its commercial impact on the licensor.

A licensing executive receives a gift valued at $500 from a prospective licensee during negotiations. Ethical standards suggest the executive should:

Answer: Return or decline the gift to avoid undue influence

Declining or returning gifts during active negotiations avoids even the appearance of impropriety or undue influence on the outcome.

In ethical licensing practice, royalty stacking occurs when multiple licensors each demand royalties for overlapping technology. The ethical concern for a licensee is primarily:

Answer: Bearing an unfair cumulative financial burden that impedes commercialization

Royalty stacking can impose unsustainable cumulative costs on licensees, which raises fairness concerns and may hinder product development and access.

When a CLP professional discovers that their employer has been underreporting royalties to a licensor, the most ethical action is to:

Answer: Report the discrepancy internally and escalate if not remedied

Ethical obligations require raising compliance issues internally first; if unresolved, escalating through proper channels or external reporting may be warranted.