17879807
Description
Mind Map by Leonor vargas herrera, updated more than 1 year ago
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Created by Leonor vargas herrera
over 5 years ago
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NEGOTIATIONS
AND LICENSING
- The purpose of any licensing negotiations is for both
sides to identify clearly what each wants from the
commercial arrangement they intend entering into.
The objective is to achieve an outcome, where each side
is clear on what it is giving and receiving from the
agreement and, importantly, that each party is
content with the final deal reached and has gained a
sense of trust and fairness from the other.
- THE TEAM
- It is unwise to negotiate on your own, as points
and issues may arise that you are either unsure
of or misinterpret. It is best to appoint a small
team, which can be as few as two people, to
address points on technology, manufacturing, legal,
IP and finance, as required. Identify the colleagues,
and any consultants, you think should be involved
in the negotiations and work out a clear role for
each in the discussions. Decide on who will lead the
negotiations and outline the process the team
should follow in accepting or rejecting proposals
during the negotiation.
- It is unwise to negotiate on your own, as points
and issues may arise that you are either unsure
of or misinterpret. It is best to appoint a small
team, which can be as few as two people, to
address points on technology, manufacturing, legal,
IP and finance, as required. Identify the colleagues,
and any consultants, you think should be involved
in the negotiations and work out a clear role for
each in the discussions. Decide on who will lead the
negotiations and outline the process the team
should follow in accepting or rejecting proposals
during the negotiation.
- NEGOTIATING
- The process of negotiation is frequently informal and,
typically, is not completed in a single meeting of the parties
around the table. More usually, the parties meet several
times to discuss the technology. When they decide to enter
into a formal licence arrangement, specific individuals from
the team with a combination of technical and legal expertise
are introduced on both sides to complete the deal and to sign
a formal agreement.
- When all of the points are agreed, the parties then enter
into a formal contractual agreement, which needs to
conform to the requirements of contract law in order to
make it a legally-binding deal. The main point to be aware
of is that the agreement needs to provide for the exchange
of a bargain in order to create an enforceable contract –
that is, a ‘consideration’ is exchanged in return for
‘something of value’. The contract must fulfil three essential
elements. There must be: Terms of exchange specified for
the bargain; Something of value exchanged; and Mutual
exchange.
- When all of the points are agreed, the parties then enter
into a formal contractual agreement, which needs to
conform to the requirements of contract law in order to
make it a legally-binding deal. The main point to be aware
of is that the agreement needs to provide for the exchange
of a bargain in order to create an enforceable contract –
that is, a ‘consideration’ is exchanged in return for
‘something of value’. The contract must fulfil three essential
elements. There must be: Terms of exchange specified for
the bargain; Something of value exchanged; and Mutual
exchange.
- The process of negotiation is frequently informal and,
typically, is not completed in a single meeting of the parties
around the table. More usually, the parties meet several
times to discuss the technology. When they decide to enter
into a formal licence arrangement, specific individuals from
the team with a combination of technical and legal expertise
are introduced on both sides to complete the deal and to sign
a formal agreement.
- THE TERMS
- Licence Fee
- The licence fee (also referred to as ‘lump sum’,
‘down payment’ or ‘upfront fee’) is a payment
that, typically, is separate to royalty payments.
- The licence fee (also referred to as ‘lump sum’,
‘down payment’ or ‘upfront fee’) is a payment
that, typically, is separate to royalty payments.
- Royalties Normally
- royalties are paid in addition to the licence fee. They are
based usually on a unit, a volume or a weight of sale –
the ‘royalty base’.
- Setting the Royalty Rate In setting the royalty,
consideration must be given to the end-use or
application of the product or technology.
- Minimum Royalty The licensor should
have an expectation of achievable
annual sales. A minimum royalty can
be based on this market forecast.
- Resetting Minimum Royalties In the event that the
minimum royalty is not achieved, partners usually build
some scope into the licence agreement for renegotiation of
the minimum royalty on reasonable terms, but cancellation
of the licence is an option, or reverting to a non-exclusive
licence where an exclusive licence exists.
- Setting the Royalty Rate In setting the royalty,
consideration must be given to the end-use or
application of the product or technology.
- royalties are paid in addition to the licence fee. They are
based usually on a unit, a volume or a weight of sale –
the ‘royalty base’.
- Licence Fee
- HEADS OF AGREEMENT
- Before any exchange of agreement templates begins, it
is essential that a ‘Heads of Agreement’ is discussed
and that agreement is reached on each of the
important aspects of the planned interaction, be it a
research collaboration, a licence agreement, a licence
option agreement, patent exploitation agreement, or
other. The following section provides a template for a
licence agreement, with some prompters on the key
elements that should be discussed between the parties
to establish the main points of the agreement.
- Before any exchange of agreement templates begins, it
is essential that a ‘Heads of Agreement’ is discussed
and that agreement is reached on each of the
important aspects of the planned interaction, be it a
research collaboration, a licence agreement, a licence
option agreement, patent exploitation agreement, or
other. The following section provides a template for a
licence agreement, with some prompters on the key
elements that should be discussed between the parties
to establish the main points of the agreement.
- THE TEAM
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