IPR Provision

We are currently trying to deal with a major Telco manufacturer, a worldwide first class organization that intends to develop and commercialize an innovative product for their market. They came to see us and started to negotiate since awhile.

Now that we almost agree on the main T&C, it is time enough to draft the term sheet or the MoU. Assisting the negotiation is of course one of my essential prerogatives as legal counsel, due to the fact that I will have the hard mission to draft as much accurately that I can the terms and conditions agreed by the parties, I really need to be cautious. When we talk about a two million dollars deal, you really need to take care about the way you express your needs for your organization and how important will be the responsibilities for your company in case of failure.

Assuming that during the negotiation, everybody’s around the table are quite disposed to be orally ok with everything, the way you will draft the agreement is the way it will be interpreted by the courts in case of litigation. Therefore I would say that the main quality for a legal counsel in charge of these kind of negotiation is a particular sense of communication, humour (yes…sometimes it really helps to stress down a situation) and rigour in writing.

One example, is the way you draft the IP provision; it is for sure one of the most important provision in an OEM agreement or whatever agreement that involves an entanglement of IP responsibilities between two organizations.

Generally, here is below the way I try to impose a neutral wording, not too much binding for us but enough reassuring for the partner… in fact you undertake in good faith that there is no pending claim (but you know that some will raise or occur during the relationship), you say that you own your IP (which is right) but never guarantee that you will have to bear the legal cost or whatsoever in case of litigation….the rest of the provision is only a “decorum”.

1 - Intellectual Property rights ; Confidentiality

1.1 «X Company» represents and warrants that it owns or has sufficient license rights to all patents, trademarks, copyrights, mask works, trade secrets, and all other intellectual and industrial property rights necessary to perform all activities contemplated by the parties under this Agreement, including without limitation all relevant manufacturing, use, and sale rights.

1.2 Both parties acknowledge that many aspects of the design, prototype production and operation of the Products, in any form, are proprietary and confidential information and trade secrets of «X Company», its licensors, or «Y Company», as the case maybe, (collectively “Confidential Information”). Both parties also acknowledge that the other party may provide to the other party certain specifications, schematics and other technical data that constitute Confidential Information to allow for the service, repair or support of the Products. Neither party shall directly or indirectly discuss, disclose, copy, modify, use (except only as expressly permitted by «X Company», its licensors, or «Y Company», as applicable) or otherwise transfer the Confidential Information to any other person or entity at any time without the prior written consent of the other party, except (i) at the written direction of the party which is the owner of such information; (ii) to the extent necessary to comply with law, the valid order of a court of competent jurisdiction or the valid order or requirement of a governmental agency or any successor agency thereto, in which event the disclosing party shall notify the owner of the information in advance, prior to making any disclosure, and shall seek confidential treatment of such information in advance, prior to making any disclosure, and shall seek confidential treatment of such information; (ii) as part of its normal reporting or review procedure to its parent company, its auditors and its attorneys, provided such parent company, auditors and attorneys agree to be bound by the provisions of this paragraph; or (iv) to the extent necessary to permit the performance of obligations under this Agreement.

1.3 Additionally, neither party may refer to the fact of the relationship between them in publicity material or publicize the terms of this Agreement without the prior written consent of the other, which shall not be unreasonably withheld or delayed, regarding both the contents and timing of any such announcement.

1.4 Any technology developed by «X Company» under this Agreement shall be the property of «X Company». Any technology developed by «Y Company» under this Agreement shall be the property of «Y Company». Any technology jointly developed by «X Company» and «Y Company» under this Agreement shall be jointly owned by «X Company» and «Y Company» with each party holding an undivided one-half interest in such jointly developed technology. Neither party may use such jointly developed technology outside of the Product without permission of the other party which permission shall not be unreasonably withheld.