THE NEGOTIATION PROCESS

THE NEGOTIATION PROCESS

1. THE PREPARATION: This is the most important phase, both the licensor and licensee would have determined a license agreement is in keeping with their respective business objectives. They need to prepare for the upcoming formal meeting between the parties, to identify what one wants and the other party be expecting to achieve from the discussions. At best, The lead negotiator would be one who knows the overall business strategy and be assisted by a team consisting of experts from the financial, legal and technical areas, each team member must understand the overall objective. Prepare a document is called a Heads of Agreement, a summary of the key commercial issues to be covered in the license agreement and the position (maximun or minimun) of the party on each such issue, this resource can help negotiated more easily and rapidly.

   • THE DISCUSSION: In this case the licensor promotes the merits and the opportunity offers by its technology, and the potential licensee reviews documentation and information under a confidentiality agreement, may also set forth his views about the value of the license to his business and why he is interested.
     • THE PROPOSING: The parties are exploring the possible relationship and the principal commercial terms. Key questions are being asked, assumptions tested, strategic objectives established and boundaries identified. It's neccesary to interchange opportunities that can be created by generating variables or creating different options.
       • THE BARGAINING: A variety of different solutions are possible in solving a problem or in arriving at a mutually acceptable agreement. All of the key terms of the agreement, including, for example, license exclusivity/geographical territories/scope of license/payment amounts and timing/royalties are variables