NEGOTIATIONS AND LICENSING

NEGOTIATIONS AND LICENSING

1. The purpose of any licensing negotiations is for both sides to identify clearly what each wants

   • The objective is to achieve an outcome, where each side is clear on what it is giving and receiving
   • Each party should decide in advance of the negotiations what its expectations are for the transaction

2. THE TEAM

   • It is unwise to negotiate on your own,
   • Identify the colleagues, and any consultants
   • Decide on who will lead the negotiations and outline the process

3. NEGOTIATING

   • The process of negotiation is frequently informal and, not completed in a single meeting
   • The process begins with discussion on the main points that must be agreed
   • The negotiations should focus on one item at a time until agreement is reached.
   • The agreement specifies the terms and conditions for exchange of the bargain.
   • It is important for you to provide the licensor with sufficient information and strong arguments

4. THE TERMS

   • Licence Fee
     • is a payment that, is separate to royalty payments
     • Where negotiations on licence fees get into difficulty, one can introduce a trade-off between the fee and the royalty,
   • Royalties
     • They are based usually on a unit, a volume or a weight of sale
   • Setting the Royalty Rate
     • In setting the royalty, consideration much be given to the end-use or application of the product or technology
   • Minimum Royalty
     • A minimum royalty can be based on this market forecast
     • It might be more appropriate to choose a minimum sales figure, which is different to a minimum royalty, in that it ensures the market is kept alive,
   • Resetting Minimum Royalties
     • In the event that the minimum royalty is not achieved, partners usually build some scope into the licence agreement
     • The to discusses some approaches to negotiating commercial

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