NEGOTIATIONS AND LICENSING

NEGOTIATIONS AND LICENSING

1. The objective of any license negotiation is that both parties clearly identify what each one wants from the trade agreement they intend to conclude.

   • The licensee must appreciate the commercial potential of the technology and be able to convince the licensor that he has the ability to fully exploit it.
   • Each party must decide before negotiations what are your expectations for the transaction and has set a minimum in terms who is willing to accept

2. THE TEAM

   • It is better to designate a small team, which can be only two people, to address points on technology, manufacturing, legal, intellectual property and finance, as necessary.
     • Identify colleagues and consultants that you think should be involved in the negotiations and determine a clear role for everyone in the discussions.
       • You may need to seek clarification from your board of directors to solve difficult problems in which the terms may not be acceptable to your own organization.
     • The person leading the team must understand corporate problems and the limits beyond which they cannot negotiate.

3. NEGOTIATING

   • The negotiation process is often informal and, in general, is not completed in a single meeting of the parties around the table.
     • The process begins with a discussion on the main points to be agreed upon and generally extends over a period of time, taking the form of conference calls and exchanging documents by email.
       • It concludes with the introduction of a draft agreement, when the main points have been agreed.
       • It concludes with the introduction of a draft agreement, when the main points have been agreed.
       • . The main point to keep in mind is that the agreement must provide for the exchange of a bargain to create an executable contract, that is, a "consideration" is exchanged in exchange for "something of value."
       • The contract must fulfill three essential elements. There must be: Exchange terms specified for the business; Some value exchanged; and mutual exchange.

4. THE TERMS

   • Licence Fee
     • The license fee (also known as "lump sum", "down payment" or "down payment") is a payment that is usually separate from royalty payments.
       • Cost of patents to date (or a percentage of these) or cost of research to date (or a percentage of this);
   • Royalties
     • and frequently used to negotiate a royalty. This requires an appreciation of the operating costs, the probable selling price and the net margin for the product of the technology being licensed.
       • If the parties are not sure of this, then the next best approach to select a royalty rate is to compare the known royalty rates for similar products in similar markets.
   • Setting the Royalty Rate
     • When establishing the royalty, the final use or application of the product or technology should be considered.
       • 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.
       • Minimum Royalty
         • The licensor should have an expectation of achievable annual sales. A minimum royalty can be based on this market forecast. The minimum royalty also ensures that the licensee actively exploits the licence and does not use it as a blocking manoeuvre towards competitors

5. HEADS OF AGREEMENT

   • Before any exchange of agreement templates begins, it is essential that the 'Heads of Agreement' are discussed and an agreement is reached on each of the important aspects of the planned interaction, be it a research collaboration, an agreement of license, a license option agreement, patent exploitation agreement or other.
     • Heads of Agreement - licence
       • Parties
       • Start date
       • Duration
       • Esclusivite
         • Exclusivity can be granted without giving away exclusive rights to the whole IP. Different kinds of exclusive rights can be divided out by defining specific rights that fall within the following terms:

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