NEGOTIATIONS AND LICENSING

NEGOTIATIONS AND LICENSING

1. The agreement

   • to achieve an outcome
   • what it is giving
   • what is receiving
   • each party is content with the final deal reached
   • Heads
     • Parties
     • Start date
     • Duration
     • Nature of licensed IP
     • Work schedule
     • Costs
     • Payment schedule
     • Lump sum/royalties
     • Licence option
     • Option term on licence
     • Right of first refusal
     • Scope of licence
       • Exclusive
       • Sole
       • Non-exclusive
       • Option
     • Exclusivity
       • Application
       • Territory
       • Duration
     • Liability
     • Warranty on licensed patents
     • Ownership of IP
     • Ownership of improvements
     • Infringement
     • Termination
     • Choice of law
     • Dispute resolution

2. The team will need

   • who lead the negotiations
   • the process when accepting or rejecting proposals
   • break-out time to discuss points in private
   • seek clarification from your management board

3. Negotiating: Process

   • discussion on the main points
   • introduction of a draft agreement
   • draft document is agreed and exchanged
     • • Terms of exchange specified for the bargain
       • Something of value exchanged
       • Mutual exchange

4. ·

   • 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, but deductible against the first payments
     • Cost of patents to date or cost of research to date
     • A lump sum to cover the costs required after the transfer
   • Royalties
     • operating costs
     • likely sales price
     • net margin for the product
     • • For stand-alone products or processes, base on the sales price
       • For compound products or processes
         • base on a percentage of the premium achieved by the manufacturer
         • base on the percentage contribution
       • a precise cash amount per unit/volume/ weight sold
       • a percentage of the profit
       • A sliding scale with a high initial royalty falling to a lower rate on increased sales

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