Alltech Corp Alltech Corp Case Study

Alltech Corp Alltech Corp. is a small Midwestern business that owns a valuable patent. Alltech has approximately a thousand sharehodlers with 100,000 authorized and outstanding shares. Block Corp. would like to have the use of the patent, but Alltech refuses to give Block a license. Block has tried to acquire Alltech by purchasing Alltech’s assets, but Alltech’s Board of Directors refused to approve the acquisition. Alltech’s shares are selling for $5.00 per share. Discuss how Block Corp. might proceed to gain the control and use of Alltech’s patent.

1. The presentation of your paper shall adhere to the following structure:
2. Issue – Identify the issue(s) (Each issue must have its own IRAC)
3. Rule – Identify and explain/define the applicable rule(s), term(s), or concept(s)
4. Analysis – Apply the applicable rule, term, or concept to the facts. And, present arguments for both sides.
5. Conclusion – Pick one side and give a conclusion

Alltech Corp

Issue

The issue at hand is that Alltech does not want to share its patent rights with Block Corp. The patent is valuable and pertinent to the survival of the company. Moreover, Alltech does not want any business deals with Block Corp especially as pertains to acquisition of its assets. However, Block Corp cannot give up in trying to control and use the patent because it would bolster its business operations. Furthermore, the patent would increase its success in the market.

Rule

Patent licensing should be perceived from different angles given the kind of deal that two companies engage in. In the case Alltech Corp, giving the patent license would culminate into some sort of exchange in which it would lose control and use of the patent. Since Block Corp is interested in acquiring the company, it only means that want an exclusive license. Such a license would entail total transfer of the ownership rights to Block Corp as the licensee. However, the title to the patent would remain under Alltech. In case Alltech would agree to the patent licensure, Block Corp would have the right to sue in case of patent infringement.

Analysis

Patent licensing would be beneficial to Alltech given the amount of returns that would be accrued. Alltech will gain financially by allowing Block Corp to license the patent. Patent licensing is also considered a way of reducing cost of involved in research and development. It also helps to save time that would be required to constantly reinvent the patent. Alltech would also stand to gain from increased market penetration because of widening its scope through the licensure. However, it would be difficult for the two companies to share the patent given that Alltech does not want to be lose control of its assets. According to 35 USC 262, co-ownership of patents is a tricky situation because of the scope of control (Mueller, 2012). It would be difficult for Alltech and Block Corp to synchronize their use of the patent unless their rights are clearly stipulated in the contractual agreement. The law highlights that either of the parties may decide to sell the patent regardless of seeking permission from the other owners. This would be disadvantageous to Alltech in case that is the agenda of Block Corp.

Conclusion

Inasmuch as patent licensing is favorable to both parties, it would lead to loss for Alltech Corp. The company would be forced to give up its patent rights in order to accommodate the demands from Block Corp. Moreover, Alltech may be sidelined in any future deals concerning the patent, which would lead to reduction of its control. Whatever kind of deal Alltech embraces, the patent should considered as a valuable asset that should not be exchanged for anything of lesser value. Based on the laws of patent licensure, such deals would render Alltech powerless to its partners. It would be subjecting itself to unnecessary legal suits in case they do not outline their rights clearly. Therefore, it is important for Alltech to avoid the licensure deal since it has much to lose than gain.