Disposition of the exclusive right for the result of the intellectual activities and/or for means of individualization through entering into a license contract

Key words: intellectual property, results of intellectual property, means of individualization, license contract, exclusive rights transfer, disposition of exclusive rights.

According to article 1226 of the Civil Code of RF ["The Civil Code of the Russian Federation (the fourth part)" dd. 18.12.2006 No. 230-FL (as amended dd. 13.07.2015)], the intellectual rights for the results of intellectual property and means of individualization include the exclusive (proprietary) rights and, in certain cases, the personal non-proprietary and other rights. And one of the most frequent questions arising in this field of the civil-law relations is the issue of the rights transfer for the items of intellectual property .

A right holder can dispose of the exclusive rights belonging to him/her, i.e. he/she to some extent has an opportunity to determine their "legal fate". This opportunity is fixed by the Russian legislation that provides for two main "contractual" models: the exclusive right alienation and granting of the right to use that is exercised within the framework of a license contract .

As stated in article 1235 of the Civil Code, a license contract – is a contract in accordance to which "…one party - an exclusive right holder for the result of the intellectual activity or for the means of individualization (licensor) grants or is obliged to grant to the other party (licensee) the right to use such result or such means within the limits stipulated by the contract."

For all that, the exclusive right transfer for the result of the intellectual activity or for the means of individualization to a new right holder is not a ground for change or termination of a license contract entered into by a previous right holder. Besides that, as noted in Decree No.5 of the Plenary Assembly of the Supreme Court, Plenary Assembly of the Supreme Arbitration Court No.29 [Decree of the Plenary Assembly of the Supreme Court of RF No. 5, Plenary Assembly of the Supreme Arbitration Court of RF No. 29 dd. 26.03.2009 "On certain issues arisen due to enforcement of the fourth part of the Civil Code of the Russian Federation], the Civil Code does not provide for a necessity of a licensee's consent obtaining (upon availability of license contracts entered into earlier) for entering into an exclusive rights alienation contract.

License contract can represent an ordinary (non-exclusive) license, when a licensee is granted a right to use an item of intellectual property with reserving the licensor's right to issue licenses to other persons, and an exclusive license within the framework of which a licensee is granted a right to use an item of intellectual property without reserving such right of the licensor.

An exclusive license restricts materially the licensor's rights: a licensor is not entitled to use him-/herself a result of the intellectual activity or means of individualization in those limits in which the right to use such item is granted to a licensee under a contract upon the conditions of an exclusive license (unless this contract provides for otherwise). And in an ordinary license, as noted in literature, these restrictions have a purely economic nature  rather than legal one, being capable of influencing in a particular way upon a price of the goods/services and certain other market indicators.

The specific nature of the license contracts in the field of the intellectual property preconditions the special norms operation in relation to them in the the Russian Federation legislation: the Civil Code sets forth the special requirements to material clauses determination of such contracts, the procedure of their entering into, registration, termination etc. As for the rest, the general provisions on the obligations and contracts of the Civil Code of RF are applied to them. 

A mandatory formal requirement to a license contract is its written form under threat of its invalidity. Further, a license contract shall obligatorily provide for: a subject matter of a contract through stating of result of the intellectual activities or means of individualization which right of use is provided under a contract, with stating, in the respective cases, of a document number certifying the exclusive right for such result or for such means (patent, certificate); the ways of use of a result of the intellectual activity or means of individualization. A license contract shall have a territory specification in which the use of a result of the intellectual activity or means of individualization is allowed. If a contract does not contain a specifcation of a territory in which the use of such result or such means is allowed, a licensee is entitled to use them in the entire territory of RF. 

Term for which a license contract is entered into, may not exceed a term of the exclusive right validity for the result of the intellectual activity or for means of individualization. If no term is determined in a contract, then a contract, as a general rule, is regarded as entered into for five-year term. In case of the exclusive right termination, a license contract is terminated.  Under a license contract, a licensee is obliged to pay a remuneration to a licensor set forth by a contract unless the contract provides for otherwise. If a clause on a remuneration or procedure of its determination is absent in a refundable license contract, a contract is regarded as not having been entered into.

Construal of the license contract's clauses is always narrow: a licensee can use an item of the intellectual property only within the limits of those rights and by those ways that are directly stipulated by a license contract. Use of an item of the intellectual property by a way that is not stipulated by a license contract or in any other way beyond the rights granted to a licensee under a contract, involves responsibility for exclusive right infringement for an item of the intellectual property. For all that, those clauses of a license contract are recognized as null and void that limit the right of a citizen to create the results of the intellectual property or to alienate the exclusive right for such results to other persons.

The main peculiarity of the license contracts under consideration consists in the following: granting of a right to use the result of the intellectual activity/means of individualization under a license contract is subject to state registration. Right granting without registration is regarded as not having taken place.

So, according to article 1232 of the Civil Code, if a result of the intellectual property or a result of individualization is subject to state registration by virtue of the law, then, among other things, a right granting of its use is also subject to state registration upon an application of a party/the parties of a contract. If either of the contract parties files an application, then one of the following documents as chosen by an applicant shall be attached to an application: a notification on the exclusive right disposition that has taken place, signed by the contract parties; an extract from a contract certified by a notary; a contract itself.

In such application it is necessary to specify a kind of a contract, information on the parties, a subject matter of a contract with mandatory specification of a document number certifying the exclusive right for the result of the intellectual activity or for means of individualization; a contract validity period if available; a territory (if it is determined in a contract) in which the right to use a result of the intellectual activity or means of individualization is granted; the ways of a result use of the intellectual activity or goods and services stipulated by a contract in relation thereof the right to use the means of individualization is granted; consent availability for the right granting to use a result of the intellectual activity or means of individualization under a sublicense contract, if a consent is given; an opportunity of a unilateral contract termination.

As one can see from the respective provisions of the Civil Code, entering into a license contract complying with all the requirements fixed by the Russian legislation and registration of the rights transfer to use a result of the intellectual activity or means of individualization specified therein, is a reliable way to secure interests to the full extent of all the persons concerned. A license contract – is a sufficiently well-functioning legal mechanism that promotes to the rights protection both of the right holders and of licensees and company on the whole.

Thus, the procedure of drawing up, entering into contract and registration – is a rather complex process with a plenty of peculiarities. Besides that, still there remain issues that are not regulated yet in the RF legislation and that can cause practical problems when entering into and executing license contracts, as for example: the procedure of documents return to a licensor in case of a license contract termination, control of improvements made by a licensee in an item of intellectual property, and others.