NEGOTIATIONS AND LICENSING

Oscar Camilo Rodriguez
Mind Map by Oscar Camilo Rodriguez, updated more than 1 year ago
Oscar Camilo Rodriguez
Created by Oscar Camilo Rodriguez over 2 years ago
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Mind Map on NEGOTIATIONS AND LICENSING, created by Oscar Camilo Rodriguez on 04/24/2019.

Resource summary

NEGOTIATIONS AND LICENSING
  1. THE TEAM
    1. It is unwise to negotiate on your own, as points and issues may arise that you are either unsure of or misinterpret. It is best to appoint a small team, which can be as few as two people, to address points on technology, manufacturing, legal, IP and finance, as required. Identify the colleagues, and any consultants, you think should be involved in the negotiations and work out a clear role for each in the discussions.
    2. NEGOTIATING
      1. The process of negotiation is frequently informal and, typically.
        1. The process begins with discussion on the main points that must be agreed and 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. The parties may need to meet in person at some point in between, if discussions become too complex to resolve certain issues on the phone. Finally, the draft document is agreed and exchanged for signature by both parties.
          1. The contract must fulfil three essential elements. There must be
            1. Terms of exchange specified for the bargain
              1. Something of value exchanged
                1. Mutual exchange
          2. THE TERMS
            1. Licence Fee
              1. The licence fee (also referred to as ‘lump sum’, ‘down payment’ or ‘upfront fee’) is a payment that, typically, is separate to royalty payments. For a proven technology or product, which is already in commercial operation and is being transferred as a turn-key technology package to the licensee, the licence fee is usually a set fee which all licensees pay.
              2. Royalties
                1. Normally, royalties are paid in addition to the licence fee. They are based usually on a unit, a volume or a weight of sale – the ‘royalty base’
                  1. Setting the Royalty Rate
                    1. In setting the royalty, consideration must be given to the end-use or application of the product or technology. A stand-alone product or process based completely on the licensed technology is more straightforward than a case where the technology is only part of a whole
                    2. Resetting Minimum Royalties
                      1. 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.
                      2. Minimum Royalty
                        1. 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
                  2. HEADS OF AGREEMENT
                    1. Before any exchange of agreement templates begins, it is essential that a ‘Heads of Agreement’ is discussed and that agreement is reached on each of the important aspects of the planned interaction
                      1. Heads of Agreement – Licence
                        1. 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, Option term on licence, Right of first refusal, Scope of licence, Exclusivity. Liability, Warranty on licensed patents, Ownership of IP, Ownership of improvements, Infringement (who takes action to sue), Termination, Choice of law, Dispute resolution.
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