USA Law and Practice Contributed by: Olesya Bakar, William “Bill” Jackson, Daniel E. Levisohn and Steven D. Lear, Holland & Knight LLP
A corporate board may create committees and sub - committees to which it would delegate certain mana - gerial functions. For LLC or LP JVs, the manager will have certain fiduciary duties under the applicable statute or case law. The JV agreement, however, can modify or elimi - nate those duties (to the extent permitted by appli - cable law), and the venturers have flexibility to cre - ate bespoke mechanisms for making decisions and resolving conflicts. 7.3 Conflicts of Interest In the corporate context, a director who has a con - flict of interest must disclose that conflict of interest to the entire board and recuse themselves from the applicable decision. For LLCs and LPs, conflicts of interest should be addressed in the JV agreement. Most LLC statutes provide the default rule that such conflicts must be approved by the non-conflicted venturer(s), and this is generally an appropriate JV agreement provision. Conflicted transactions may also be required to be on arms-length market terms. The JV agreement should provide that rights on behalf of a JV under an affiliated agreement are exercised solely by the non-affiliated venturer. Otherwise, the affiliated venturer could vote against the JV, enforcing the agreement against it or its affiliate. In some cases, venturers may elect to waive the fidu - ciary duty of loyalty so that each venturer can make JV decisions in their own best interest. If not waived or limited in the JV agreement, the default duty of loyalty (which generally prohibits competing against the JV) under the laws of the applicable jurisdiction would apply to the manager, and possibly the venturers.
turer is licensing the IP, the other venturers will want to make sure the licence is available for as long as the JV operates and address what happens if the licensor leaves the JV. The licensing party will want to specifi - cally set out applicable usage restrictions and fields of use that govern the JV’s use of any licensed IP. With respect to any IP that the JV develops, the JV agreement should address who owns it and who has a right to use it. In general, if the JV develops IP using its own employees or contractors, the JV will likely have rights to such IP. The JV agreement should deline - ate each venturer’s IP rights, including use by each venturer, licensing to third parties and enforcement of the JV’s rights against third parties. Each venturer may have the exclusive right to use the IP within a specified field of use. The JV agreement should address how IP developed by the JV will be owned and used upon the JV’s termi - nation if a venturer leaves the JV. The venturers could jointly own the IP, with a separate agreement outlining their respective uses. Alternatively, one venturer could own the IP and license it to the other, subject to usage restrictions. If there are pending patent applications, an issue is who controls and pays for their prosecu - tion. 8.2 Licensing v Assignment of IP Rights In general, if a venturer has valuable IP, it will want to keep ownership of the IP, in which case it would provide a licence to the JV to use it for specific pur - poses. The licensing venturer needs to balance the need to maintain ownership of valuable IP while still granting the JV a licence that is sufficient to enable the JV to independently operate. Also, the licensor should consider the JV’s right to assign any licence to a third party. An important issue with any licence or assignment is protection of the IP. For instance, if a JV is only licensing IP material to its business, the licence should contain terms ensuring the owner will take sufficient steps to stop third-party infringers. A licensor of IP will also want to consider whether it will receive royalty payments for the licence or wheth - er the licence will be royalty-free.
8. IP and ESG 8.1 Ownership and Use of IP
Each JV must have the right to use the IP it needs to conduct its business, which may include rights to use the names, marks or other IP owned by one of the venturers. IP can either be contributed in kind to the JV via an IP assignment or licensed to the JV. If a ven -
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