NEGOTIATIONS AND LICENSING

NEGOTIATIONS AND LICENSING

1. THE TEAM

   • It is best to appoint a small team, which can be as few as two people
   • Identify the colleagues, and any consultants
   • Decide on who will lead the negotiations
   • Outline the process the team should follow in accepting or rejecting proposals during the negotiation.
   • Include break-out time to review and discuss points in private
   • To conclude terms, he must be convinced that the deal is right for his organization

2. NEGOTIATING

   • The process begins with discussion on the main points that must be agreed
   • Usually extends over a period of time, taking the form of conference calls and e-mail exchange of documents.
   • It concludes with the introduction of a draft agreement, when the main points have been agreed.
   • If discussions become too complex to resolve certain issues on the phone the parties may need to meet in person
   • In the first instance, the negotiations should focus on the Heads of Agreement When all of the points are agreed, the parties then enter into a formal contractual agreement
   • It is important to avoid beginning negotiations with the exchange of a template licence agreement as the initial draft document.

3. THE TERMS

   • Licence Fee
     • A once-off non-refundable fee
     • A number of fees paid on reaching agreed milestones
     • A fee paid on signing of the licence agreement
     • Cost of patents to date (or a percentage of these)
     • A lump sum to cover the costs of negotiating and drafting
     • The licence fee is intended to reflect a number of considerations:
       • Payment as a security or sign of intention
       • Recognition of access to strong IP
       • Recognition on the part of the licensee that a significant investment has gone into developing the technology
       • A payment towards a portion of the expenditures already committed by the licensor Milestone fees to reward the licensor for the successful development of the technology
   • Royalties
   • Setting the Royalty Rate
   • Minimum Royalty
   • Resetting Minimum Royalties

4. HEADS OF AGREEMENT

   • Heads of Agreement – Licence
     • Parties
     • Start date
     • Duration
     • Nature of licensed IP (patent, copyright, know-how, etc.)
     • Work schedule
     • Costs
     • Lump sum/royalties (minimum royalties)
     • Payment schedule
     • Licence option
     • Exclusivity
     • Liability
     • Warranty on licensed patents
     • Ownership of IP
     • Ownership of improvements
     • Infringement (who takes action to sue)
     • Termination
     • Choice of law
     • Dispute resolution

5. Jorge Sosa

   • Grupo 110

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