If a member of the ILP Vegetable wants to take a license for a patented trait of a fellow member, he starts bilateral negotiations. These negotiations can lead to a license agreement. This agreement can be based on the so-called Standard License Agreement: a standard agreement provided for by the ILP Vegetable, but it may also deviate.
In the event that negotiations don’t lead to an agreement within three months after the start, the case can be submitted to independent experts. The method of decision-making by the experts is based on the so-called ‘Baseball Procedure’. Both members submit their license fee proposal to the secretary of the ILP Vegetable with all the arguments, why they think that their proposal is reasonable.
This could be a proposal for a royalty percentage or - if both parties agree - a lump sum. After receiving figures from both members, the secretary exchanges the two proposals between the two members involved with the possibility to come to an agreement within three weeks.
If no agreement can be reached, the decision is referred to the independent experts. These independent experts will choose among the proposals the most reasonable proposal and then a Standard License Agreement including the chosen proposal will be executed. This system encourages both parties to propose reasonable positions, because an unreasonable position will be rejected in favour of a more reasonable proposal. Furthermore the cost for the baseball arbitration must be paid by the member whose proposal has not been selected by the independent experts.
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