NEGOTIATION

NEGOTIATION

1. is a process of exchange of information and commitments in which the two or more parties, which have common interests and others divergent, try to reach an agreement

   • Preparing to negotiate
     • A key to any agreement is that each party understands what they want from the agreement. Thus, effective negotiation begins with effective preparation.
       • Effective preparation includes
         • gathering the right team
         • preparing the heads of agreement
         • defining the guidelines for the process
         • honestly influencing and drafting the contract
     • Should consider
       • 1. The Mean
         • In many negotiations both parties will have a deal team. The deal team will conduct due diligence and negotiate the license. A deal team will generally include
           • A business executive for development
           • an expert scientist / technician
           • a decision maker
           • a license lawyer.
       • 2.Initial Team Meeting
         • It is important that the deal team meet and reach an understanding of the business motivation for the deal and the responsibilities and role of each team member during the process
           • In preparation for negotiation, the deal The team must identify, evaluate and prioritize.The interests of your client.
       • 3. The Term Sheet
         • The term sheet ypically covers the major issues in a potential deal in outline form, including:
           • the licensed product or process; licensed territory; license fee and royalty; technical information and training required to develop and manufacture, sell and service the licensed product, and who will be responsible for same; sales and service support; degree of exclusivity, and duration of the license
             • The process of creating this document will help team members understand and focus on the overall objectives of the agreement and avoid unfavorable terms.
       • 4. Deadlines.
         • Establishing preset deadlines for each of the major steps in the negotiation process is important because it forces the other party to reveal its true intentions and interests in the licensing agreement.
       • 5 The groundwork for open dialog
         • In any negotiation, a nondisclosure agreement can provide security for both parties to maximize information transfer
       • 6. Drafting the contract.
         • Commentators have suggested that the party drafting the contract is always in the more favorable position because that party will be in a position to ensure inclusion of desirable provisions and places the other party in the position of defending every request to modify the drafted agreement.
   • The terms of a licensing contract reflect the allocation of risk between the parties of the potential future development and marketability of the patented technology.
     • Rights to improvements.
       • Parties shouldnegotiate pro visions to address the ownership of any current or future improvements of the technology. Where improvements are developed by the licensee after the signing of the agreement, the parties will need to negotiate who will own the rights to the improvements.
     • Exclusivity and field of use
       • License exclusivity refers to whether the licensor has licensed the invention/technology to multiple licensees, whereas the field of use is the circumstances for which the licensor has granted the licensee permission to make, use and sell the patented technology.
     • Proprietary position
       • Thus, a weaker proprietary interest is a risk factor for the future market success of products or services developed using the licensor’s technology.
     • Payment terms.
       • There are several forms of payment that licensing parties can negotiate to compensate the licensor for the patented technology.
     • Valuation approaches.
       • For to valuation often uses one of three methods:
         • the cost method
           • The value of the technology using the cost method is the cost of developing or purchasing the technology
         • the market method
           • the value is determined by evaluating the value assigned to comparable technology licensed recently, which requires determining
         • the income method
           • method values technology by the total estimated annual returns