‘Ring-fencing’ Biological Targets in Collaboration Agreements
Stephen Abreu explains how licensors can make sure they do not give a licensee unintended rights to biological targets arising out of their own internal research, or from separate collaborations with third parties.
Any negotiation of a collaboration agreement involves careful scoping of the rights retained by, and granted between, the collaborators, often referred to as the ‘ring-fencing’ of these rights. The goal of ring-fencing is to find a ‘Goldilocks’ zone of rights granted and rights retained that works for both collaborators.
In biological target-based collaborations, one area that requires particularly careful ring-fencing is differentiating between the specific targets of the collaboration and other targets that the collaborators do not wish to make available to the collaboration.
In these types of collaborations, one party (the licensor) is often granting licenses to the other party (the licensee) with respect to these targets (which are often called ‘collaboration targets’). Deciding which biological targets the licensee may designate as collaboration targets is often heavily negotiated. Targets under consideration, and perhaps desired by the licensee, may include those that have arisen from the licensor’s own internal research programs. Relevant programs can be those which existed on the date on which the collaboration was entered into, or those that come into existence at a later date.
When setting the appropriate ‘ring-fence’ for these internal licensor programs, the parties will often focus on a threshold for the level of effort that the licensor invests in a program. This threshold will need to be reached before the internal program can be excluded from the collaboration agreement.
Targets which the licensor wishes to ‘ring-fence’ and exclude may also be those that arise from its current or future collaborations with other collaborators.
When considering biological targets set as part of the licensor’s third party collaborations, it is important to bear in mind that some of these collaborations may be very similar to the collaboration that the licensor is negotiating with the current licensee. The licensor will need to take care to avoid granting the same rights to both licensee and third-party collaborators with respect to any biological targets set as collaboration targets.
In sum, appropriate ‘ring-fencing’ in target-based collaborations is often heavily negotiated. However, with good faith discussion about the needs of the collaborators and solid technical drafting in the collaboration agreement to accurately and robustly create mechanisms that implement the ‘ring-fencing’ understanding, collaborators may achieve a ‘Goldilocks’ zone of rights granted and rights retained that works for both collaborators.
This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.
