NEGOTIATIONS AND LICENSING

NEGOTIATIONS AND LICENSING

1. The purpose of any licensing negotiations is for both sides to identify clearly what each wants from the commercial arrangement they intend entering into. The objective is to achieve an outcome, where each side is clear on what it is giving and receiving from the agreement and, importantly, that each party is content with the final deal reached and has gained a sense of trust and fairness from the other.

   • THE TEAM Decide on who will lead the negotiations and 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 and for the team to agree on specific terms
     • To conclude terms, he must be convinced that the deal is right for his organisation.
   • NEGOTIATING 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
     • The contract must fulfil three essential elements. There must be: Terms of exchange specified for the bargain; Something of value exchanged; and Mutual exchange
   • The Heads of Agreement typically are a set of bullet point headings, under which the parties are expected to discuss and complete in their own words (or brief bullet points) the decisions they have reached on each item
     • It is important to be brief and specific on the points and to avoid the temptation to express them in legal formulations. That is the task of the acting lawyers, to whom the jointly-agreed Heads will be passed to draft a formal legal agreement that reflects the planned interaction between the parties.
   • THE TERMS Licence Fee Royalties Setting the Royalty Rate Minimum Royalty Resetting Minimum Royalties
     • A stand-alone product or process based completely on the licensed technology is more straightforward 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. Objectives

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