Ethical Practices in Licensing Flashcards

A licensing professional representing a university tech transfer office is approached by a former colleague seeking to license a patent at below-market rates. The ethical obligation is to:

Answer: Disclose the relationship and recuse from negotiating that deal

The relationship creates a conflict of interest that must be disclosed; recusal from the negotiation protects both the institution and the integrity of the process.

In the context of FRAND (Fair, Reasonable, and Non-Discriminatory) licensing, what is the primary ethical obligation of a standard-essential patent (SEP) holder?

Answer: Offer licenses on terms that do not unreasonably exclude implementers

FRAND commitments require SEP holders to make technology accessible on terms that do not unfairly exclude any implementer from participating in the standard.

When conducting royalty audits, the ethical standard for an auditor requires:

Answer: Maintaining objectivity and reporting findings accurately regardless of who hired the auditor

An auditor's professional duty is objectivity and accurate reporting; allowing the hiring party to influence findings undermines the audit's purpose and integrity.

A licensing professional discovers mid-negotiation that the technology being licensed may infringe a third party's patent. Ethical conduct requires:

Answer: Disclosing the potential infringement risk to the prospective licensee

Good faith and honest dealing require that known material risks—such as third-party infringement exposure—be disclosed to the other party before they commit to the license.

Which of the following BEST describes the ethical concept of 'due diligence' in a technology licensing transaction?

Answer: Thoroughly investigating IP ownership, validity, and encumbrances before closing

Due diligence requires a comprehensive review of ownership, validity, freedom-to-operate, and any encumbrances to ensure both parties enter the deal with accurate information.

A CLP professional who holds a financial stake in a licensee company is asked to value that company's IP portfolio for a third-party investor. The ethical requirement is to:

Answer: Disclose the financial stake and decline or obtain informed consent from all parties

A financial interest in the subject entity is a direct conflict of interest that must be fully disclosed; the professional should decline or obtain explicit waiver from all affected parties.

Under ethical licensing practice, a 'reach-through' royalty clause—requiring royalties on products developed using a licensed research tool—raises ethical concerns primarily because:

Answer: It imposes obligations on future discoveries that may be disproportionate to the tool's contribution

Reach-through royalties can create disproportionate and unpredictable future obligations that may deter downstream innovation, raising fairness concerns about the licensor's claims.