|Neil J. Wilkof|
This issue, which has a focus on transactional and commercial issues, has been guest-edited by a founder member of the JIPLP editorial board -- the distinguished writer, lecturer, commentator and blogger Dr Neil J. Wilkof. Neil also writes the February editorial, which you can read in full here:
"Do we need a rationale for IP sublicensing?
This is the third time that JIPLP has sought to dedicate an issue to commercial and related aspects of IP rights. The focus is to explore various legal aspects of the manner in which IP rights are exploited.
Against this backdrop, let us consider the following question: should we care about the rationale for various types of IP licensing? More likely than not, this matter has not occupied most readers of this journal. For those engaged in IP licensing, the concern is not over any underlying justification, but rather over the nitty–gritty of the licensing arrangement. The questions that occupy us centre on what right is being licensed, under what terms, and for what financial consideration. Any examination of licensing or sublicensing first principles usually does not arise.
That said, it is our view that our collective resistance to addressing first principles has inhibited our ability to provide robust answers to certain questions with respect to IP licensing. In support of my contention, consider the following: In the course of recently giving a public lecture on the subject of sublicensing, I sought to raise the question: what is the rationale for sublicensing? The limited attempts that have been offered to provide an answer seem to focus on patent licensing and to offer agency law as the justification for sublicensing. The problem is that, in addition to the paucity of judgments that support this view, there is case law holding that a licence in fact creates no agency relationship, at least with respect to trade marks. Not only that, but many IP practitioners have been witness to a licence agreement that provides explicitly that no agency is created between the licensor and licensee.
Pushing back against the need for a rationale for sublicensing, two responses were raised. The first maintained that it is ultimately unnecessary to enter into any consideration for the justification of sublicensing in order to engage in it. Just as we ultimately do not need to reach any single resolution about a justification for patents or copyright in order to practise patent or copyright law, so too it is unnecessary to find any rationale for sublicensing. As Nike is wont to say—‘Just Do It’.
The second response is to suggest that there is no need to inquire independently into the justification for sublicensing. The answer can be found simply by analogy to the law of real property. The sublease has been around for longer than any one of us can remember. No one seems to inquire about the justification for the right to grant a sublease. Nevertheless, the right to grant a sublease is unassailable. Given that, and that there are judgments in certain jurisdictions that have explicitly recognized the applicability of lease law principles to IP licensing, the case for sublicensing has been made out, and no further inquiry is needed.
Let's test these push-back responses by posing a follow-up question that I asked the audience that day. Assuming that there is a sublicence in place, in the event that the main licence is terminated, what is the fate of the sublicence? Assume as well that there are no back-to-back provisions in either the main licence or sublicence. The answer would seem to be tied directly to what is the legal rationale for a sublicence—yes, no, maybe?
If the licensee/sublicensor is the agent of the licensor, what do agency principles inform about this situation? Ditto if the analogy to real property is applicable. But what happens if the common-law rules of agency, or the law of real property, are not identical under continental law regimes? And what happens if a trade mark licensing is involved? There, the licensor may not want the sublicensee to continue to use the mark, especially if the relevant jurisdiction requires quality control with respect to the use of the mark by the licensee or sublicensee, and the licensor does not wish to take the necessary steps to ensure that quality control is maintained.
Two observations flow from this battery of questions. First, in my heart of hearts, I believe that we would be better able to provide robust answers if we had a firmer understanding of the first principles that govern sublicensing. Secondly, the rationale for sublicensing may not be monolithic, but rather depend upon the specific IP right being sublicensed. In my humble opinion, both propositions warrant further consideration".