(Numbers) and IP Licensing Agreements

During the course of my practice, I am continually amazed at the contents of IP and technology-related agreements I receive from opposing counsel who happen to be “good” lawyers at “good” firms.  While not getting into all the “strange,” “sloppy,” or downright “wrong” legal verbiage I see, I do have one thing that has been bothering me lately.  What’s that, you ask?  Well, it’s the use of numbers and those silly parentheticals.

I am sure all of you have seen language in agreements such as:

  • “In consideration of the license rights granted herein by Licensor to Licensee, Licensee shall pay to Licensee a one time, up-front, non-refundable license fee of one million United States dollars (US$2,000,000.00).”
  • “In consideration of the license rights granted herein by Licensor to Licensee, Licensee shall pay a flat royalty based on two and one-half percent (2.0%) of Gross Revenues received from the sale of Licensed Products.”
  • “Licensee shall pay any deficiency, plus interest thereon from the date each payment was due, within thirty (20) days of the date of any notice of such discrepancy.”

Now, for those of you paying attention, you will notice that the spelled out numbers do not match the digits appearing in parentheticals.  Why do attorneys do this?  What class in law school do they teach this? I’m told this is a practice that dates back to the days of carbon copies and “old school” telefax machines, where parties needed two chances to be able to discern the figures in legal documents.

But, in today’s world of TrueType fonts and portable document formats, why continue this practice?  Which number governs if after reviewing a twenty (20) page license agreement, both sets of lawyers and clients did not catch the discrepancy!?  (Wasn’t that “twenty (20)” annoying!?)  Well, different jurisdictions have different rules of contract construction!  Why leave it to chance?  Do people realize that over the course of an already complex IP agreement, such practice may add one or more pages to the document’s length!?

So, for everyone’s sake, I propose the following simple rule:  If the number is from zero to nine, write it out in words, else write it in Arabic digits!  If it works for college essays, it should work for IP agreements (and all other contracts) too!


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One comment so far.

  • [Avatar for Michael Feigin, Esq., NY, NJ, PA Patent Attorney]
    Michael Feigin, Esq., NY, NJ, PA Patent Attorney
    January 3, 2013 11:54 am

    I think it’s a good idea to write it out and use arabic numerals. Why? Simply because it re-enforces to the reader and author what the number is and avoids a mistake or later claim that “70% royalty” was a typo – one meant “7%”. If people don’t catch the mistake when writing it twice, they certainly won’t catch the mistake if writing it only once.