Important Agreements and Negotiation Strategies For Start Ups

Dr. Kalyan C. Kankanala kalyan@brainleague.com 91-80-41489502/04 www.brainleague.com Blog: www.indianipinfo.blogspot.com IP Newsletter - IP Convergence - Register at www.brainleague.com

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• Non-Disclosure Agreement

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Clauses
• Confidential Information • Permitted Purpose • Scope of Disclosure • Purpose • Parties • Legal Instruments • Term • Survival • Remedies • Other clauses

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• Employment Agreement

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Clauses
• Intellectual Property • Ownership
• General • Specific

• • • • • • •

Transfer Documentation and Support Third Party IP Confidentiality Non-competition Non-solicitation Moon-lighting

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• Patent Agreements

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Transfer of Patents
• Assignment • License

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Assignment
• • • • Transfer of Ownership Partial or Complete Writing and Signature Register

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License
• • • • • • Authorization or Permission Exclusive Rights Territory Writing Signature Register

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Types of Licenses
• • • Exclusive Non-exclusive Sole

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Important clauses
• • • • • Recitals Definitions Grant Royalties Term and Termination
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Recitals
• Parties – Licensor/Licensee • Addresses • Dates • Background of the transaction

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Definitions
• Interpretation clause • Consistently used words
– Specific/certain/lucid

• Attribute specific meaning • Apply to entire agreement

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Examples
• Licensor shall mean ABC company having a place of business in Bangalore and shall include its subsidiaries, assignees and legal representatives. • Licensee shall mean Kalyan, resident of xyz, Bangalore and shall include his successors, assignees, administrators, executors and other legal representatives. • Licensed Patent shall mean patents granted in USA under patent numbers xxx, yyy and patent applications pending before Indian Patent Office having filing numbers xxx, and YYY.
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Grant Clause
• Most important • Defines scope of agreement • States
– – – – – – Parties Type Subject Rights Territory Term
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Example
• Licensor grants to Licensee a nonexclusive license to use the Licensed Software within the territory of India from 1st January, 2005 to 1st January, 2006. • This clause specifies – Who grants to whom -Licensor to Licensee. – Type of license - Nonexclusive License – Rights – Use Licensed Software – Territory - India – Dates - January, 2005 to 1st January, 2006
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Term and Termination
• Term • Events
– Material Breach - Nonpayment of royalty, etc. – Bankruptcy – Insolvency – Act of god

• Rights after termination • Confidentiality

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Example
• Unless earlier terminated as hereinafter provided, this Agreement shall extend to each country in the Territory for a term of ten (10) years from the Effective Date. The term of the agreement is renewable at the option of the parties and such term and conditions shall be finalized after negotiations based on terms agreeable to both the parties.

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Royalty Clause
• Type of Royalty
– Lump sum royalty – Fixed Royalty – Running royalty

• • • •

Combination. Mode and Date of payment Accounting and Record keeping Non payment consequences.

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Example
• XYZ agrees to pay ABC, a fixed royalty of TwentyThousand-Dollars ($ 20,000) per every Calendar Year after the first year. For the first Calendar Year, XYZ shall pay ABC a fixed royalty of Ten-Thousand Dollars ($ 10,000). Such sum shall be paid on or before December 11th of every Calendar Year.

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Other Clauses
• Indemnity • Warranty • Liability

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NRDC V. ABS
• • • • Patent License Not registered Expiry of patent term License invalid

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• Other Agreements

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Clauses
• Intellectual Property
– – – – – – Pre-existing IP Ownership Transfer and Documentation Inventorship Third Party IP Warranty and Indemnity

• Confidentiality • Exclusivity and Non-Competition

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Any Questions, Comments or Observations?

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