(Numbers) and IP Licensing Agreements

By Raymond Millien
January 3, 2013

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!

The Author

Raymond Millien

Raymond Millien named one of the “World’s 300 Leading IP Strategists” by Intellectual Asset Management (IAM) Magazine and a “Corporate IP STAR” by Managing IP (MIP) Magazine, is Chief Executive Officer of Harness, Dickey & Pierce, P.L.C. He oversees the firm’s operations, including HR, Finance, Marketing/Business Development, IT, and Docketing. Previously, Ray was Chief IP Officer at Volvo Car Corporation and CEO of Volvo Cars Ventures. He has led the IP function at GE Oil & Gas and the American Express Company, and the software IP function at GE Healthcare. Ray has also served as General Counsel of merchant bank Ocean Tomo, LLC, and practiced law in the Washington, D.C. offices of DLA Piper US LLP and Sterne, Kessler, Goldstein & Fox PLLC. He received a B.S. in Computer Science from Columbia University, and a J.D. from The George Washington University Law School. In addition to his career as an innovation and legal executive, Ray is a lecturer and published author with experience as a member of several boards of directors and in venture capital, licensing, software development, and corporate and technology law.

You can read more about Ray or contact him via his Firm Bio page.

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Discuss this

There are currently 2 Comments comments.

  1. 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.