CLP CLP Licensing Negotiations & Deal Structuring 2

Question 1

What is the difference between an option agreement and a license agreement in IP deal structuring?

Accepted Answer

An option grants the right to negotiate or obtain a license within a defined period; a license grants immediate IP use rights

Answer

An option is a binding license with deferred payment terms

Answer

An option covers trade secrets while a license covers patents only

Answer

There is no legal distinction between the two documents

Question 2

In negotiating royalty rates, the 'hypothetical negotiation' framework asks parties to imagine a negotiation:

Accepted Answer

Occurring just before infringement began, between a willing licensor and willing licensee

Answer

Taking place at the time of litigation filing

Answer

Involving only the patent owner and a government arbitrator

Answer

Happening after the product launch to reflect actual market success

Question 3

Which deal structure is most appropriate when a startup lacks cash but has valuable IP?

Accepted Answer

Equity-based licensing in which the licensor receives ownership stake instead of cash royalties

Answer

Lump-sum upfront licensing with deferred payment bonds

Answer

Mandatory running royalties with no minimums

Answer

Exclusive license with immediate full payment required at signing

Question 4

A 'field of use' restriction benefits the licensor in deal structuring primarily by:

Accepted Answer

Allowing multiple licensees in different fields, maximizing total deal value from the same IP

Answer

Reducing the licensee's royalty rate in exchange for broader rights

Answer

Eliminating the need for diligence milestones in the agreement

Answer

Protecting the licensee from competition within its defined field

Question 5

What is a 'right of first negotiation' (ROFN) in a licensing context?

Accepted Answer

The right to be the first party to negotiate a license before the IP is offered to others

Answer

The right to match any third-party offer before a license is granted to a competitor

Answer

An obligation requiring the IP owner to license on standard industry terms

Answer

A clause granting automatic renewal at the current rate before renegotiation

Question 6

Which negotiation concept involves making an initial offer significantly above or below the target to anchor the counterpart's expectations?

Accepted Answer

Anchoring

Answer

ZOPA analysis

Answer

BATNA assessment

Answer

Logrolling