In present day company setting, practically just about every business is dependent on 1 kind of technological know-how or one more. And for most businesses, much of that mission-essential technological innovation is certified. From licensing program to deal with operations and interact with prospects, to licensing patents or other forms of intellectual residence to develop goods, know-how licenses are ubiquitous in present day commerce. But despite their essential relevance, companies usually pay inadequate awareness to the true phrases of individuals licenses—assuming it is all “regular.” As a result, organizations generally locate on their own with a license that does not even further their small business needs. Even even worse, badly drafted or ambiguous licenses can direct to protracted, high-priced litigation that can damage organization interactions, drain companies’ resources, and distract corporations from their actual business enterprise plans. This article addresses important factors to preserve in intellect and prevalent pitfalls to steer clear of when negotiating know-how licenses.
Fully grasp Your Company Goals
Organizations license technology to accomplish company goals. However they typically ignore those ambitions when negotiating and signing licensing agreements—entering into cookie-cutter contracts with “typical” provisions that can basically inhibit operations. To avoid this outcome, a organization should have a concrete strategy of its targets right before moving into into negotiations and connect them to the negotiating workforce.
Critique Agreements With Counsel in Light of All those Plans
At the time the business enterprise situation is established and communicated, a corporation must scrutinize just about every provision of a proposed license settlement with counsel to make certain that it furthers people targets. That involves substantive provisions like termination, maintenance, and overcome provisions. It also contains what some believe of as “boilerplate” contractual provisions, these types of as limitation of liability, selection of legislation, and arbitration provisions, as people provisions can actually form the parties’ rights and tasks.
And most importantly, events need to be ready to wander away from a licensing deal if the phrases conflict with their company ambitions or would not be commercially valuable. Never suppose previous effectiveness will carry on despite ambiguous or damaging contract conditions. And don’t let momentum dictate that execution of a offer is unavoidable.
Be Thorough About Pre-Settlement Contacts
Together with focusing on the licensing agreement itself, firms should also scrutinize the techniques main up to the last agreement. Letters of intent, memoranda of knowledge, non-disclosure agreements, pre-agreement email messages and other composed communications, and oral gross sales representations can all lead to protracted and expensive litigation. In some conditions, agreements to negotiate “in great religion” are binding and enforceable, and they can avert a celebration from insisting on radically unique phrases or from going for walks absent from the offer without the need of negotiating. Courts in Illinois and somewhere else have awarded get-togethers sizeable damages, which include lost profits and contract expectation damages, for a party’s breach of its arrangement to negotiate in good faith.