October 29, 2008
Understanding Transactional IP
Posted by Shubha Ghosh

In the previous post, I talked about IP 3.0, the latest version of IP teaching and scholarship that focuses on transactional issues in intellectual property. Today, I want to talk about why IP provides an excellent vehicle for conveying transactional skills and thinking in law schools.

The main reason, and this is more serious than it appears, is that intellectual property can often make the bitter pills of law school go down more smoothly. That is not a slam on transactional courses or on law school. I am just amazed how raising intellectual property issues into the law school classroom can turn a student's attention away from Facebook, Bejewelled, Expedia, or whatever web page may be up on his laptop at the moment. Want to teach about dreary subjects like common law process or tort damages? Let me pass on some cites to right of publicity cases to you. If your experience is like mine with these cases, classroom discussion will exponentiate with previously inert hands rising to attention and undifferentiated faces suddenly become attached to a voice. The concept of a contract not getting through? Let me suggest a couple of IP cases involving licenses and transfer of copyrighted works or trademarks. Constitutional decision making unusually opaque today? Try talking about Eldred to show deference to Congress and the bending of constitutional language in action. Analogously, some of the inert concepts of transactional practice can be better appreciated when seen through the lens of intellectual property.

There is something more than window dressing going on here. After all, legal doctrine can be spiced up in other ways. There are many substantive points where IP overlaps with the goals of a transactional law curriculum.

There are five areas where intellectual property and transactional legal skills overlap: (1) formation of a business, (2) licensing, (3) employment, (4) identifying sources of transactional value, and (5) securities disclosure and due diligence. Transactional skills are most critical at the formation stage of a business. The formation stage also raises numerous intellectual property issues: trademark registration and protection, patenting, the identification and clearance of IP rights. Businesses, at various stages, have to decide between making or buying, a decision which affects the negotiation and drafting of licenses. The internal organization of a business also hinges on employment decisions, the choices of whether to use independent contractors or employees and the terms on which these parties are hired. The choice of type of worker and terms may be shaped by the intellectual property strategies of the firm. Finally, intellectual property is a source of transactional value within a firm, and the identification of IP sources of value would affect disclosure requirements and the due diligence of a seller and purchaser of a firm's securities and other assets.

These five practical areas of overlap translate into a distinct set of transactional skills that can be effectively conveyed through the teaching of intellectual property. The first is identifying business assets. Understanding intellectual property law and institutions is critical in identifying the sources of value for a business and the types of business assets which can be the basis for realizing value. Identifying what is a patent, copyright, and trademark as well as what can be protected by patent, copyright, or trademark is foundational for recognizing and valuing business assets. The second skill is understanding how background common and statutory law serve as defaults for contractual negotiation in some instances and as immutable rules in others. In other words, law shapes the contours of a business asset and affects its value. The final skill is negotiating rights over intellectual property in order to realize and transfer these sources of value and to avoid litigation over these assets. Intellectual property provides a basis for teaching business planning and organization skills.

Today's post highlights the overlap between intellectual property and the transactional curriculum in law. Tomorrow, I discuss how this overlap can be implemented in the curriculum.

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