Home > Topics > Contracts and Agreements to Support Partnerships > Agreements: A Review of Essential Tools of IP Management > Editor's Summary, Implications and Best Practices

Good agreements benefit all parties involved. Ideally, the trust between partners permeates their entire relationship, from the negotiations of an agreement, through project implementation, and on through further agreements, collaborations, and projects. In an ideal world, an agreement is both based on trust, and serves to build trust between parties. In practice, things are rarely perfect. But be it as it may, agreements should certainly be seen as a first step toward long-term, productive, and mutually beneficial relationships.

There are many types of agreements. However, agreements fall into one of several broad categories, depending on their objectives:

• Confidentiality agreements protect confidential information from disclosure to third parties. They allow the sharing of confidential information without the concern for misappropriation.
• Materials transfer agreements protect samples (tangible property) from misuse or unauthorized distribution to third parties. Such agreements ensure that each party respects the tangible property rights of the other(s).
• Co-development agreements and collaboration agreements outline the specific contributions of different parties when they work together towards a well defined goal. They typically define allocation of resources, personnel, time, and roles of the parties, and the nature of the final product, including agreed procedures for changes in the research plans and ways to resolve disputes.
• Patent licenses and technology licensing agreements are the most common type of agreements. They allow one party to further develop, use, make, or sell the patent and/or technology of another party. Licensing agreements contain numerous terms and provisions, including a description of the rights granted, a description of how and when royalties will be paid, if any, the territory in which the technology can be used, and the length of time that the license will be granted. Patent licenses are specific to one or several patents. Technology licenses usually include the transfer of know-how (which may or may not be a trade secret) and sometimes also materials. Such licenses may be for the further development of a technology or limited to the production/manufacture of a good or the provision of a service.
• Distributorship agreements permit the licensee to receive a product from a licensor or to purchase a product from a third party for distribution in a defined market, under specific conditions. They specify the price that the licensee will pay, the quantities that the licensee will buy, and any royalties that the licensor will receive for the use or sale of its product.

Certain standard elements that are integral to every agreement:

• Recitals, preamble, and whereas clauses lay out the broad motivations and goals of the agreement.
• A list of the parties who are entering into the agreement.
• Definitions of terms used in the agreement are usually included early in the agreement.
• Confidentiality clauses.
• Territory and exclusivity clauses, defining the geographic regions in which the licensee is permitted to make, use, and/or sell the technology in question.
• Liability clauses, establishing who will accept liability for a product, and to what extent.
• Payment clauses, if any, in the form of up-front fees and/or royalties. It will ideally balance the licensor’s need for short-term income and the licensee’s capacity to make further investments for longer-term development.
• Arbitration clause, establishing up-front how disputes will be handled and settled.
• Term and termination, establishing how long the agreement will last and under what conditions the agreement may be terminated.
• Jurisdiction, warranties, and notices specify several things: the jurisdiction under which disputes are to be resolved; that the licensor does, in fact, own the intellectual property to be licensed; and where official communications are to be directed.
• Illegal/unenforceable provisions are those that can be discontinued due to invalidity, without rendering the agreement as a whole null-and-void.
• A statement of completeness verifies that the agreement is full and complete and not, for example, limited by another agreement.
• Subject law further specifies where the parties wish to have the agreement interpreted and adjudicated.
• The signatories are representatives (agents) who have the authority to bind their respective organizations (principals) to the terms and provisions of the agreement.

Public-sector research institutions can use a variety of agreements to protect and manage intellectual property. These agreements are powerful tools to foster competition in the private sector and reduce prices for consumers in developing countries. The authors emphasize the importance of establishing and maintaining trust when negotiating and implementing agreements No agreement will ever be perfect. Evidently, there are good and not-so-good agreements (and even poorly written ones or highly ineffectual agreements). The better ones may take longer to negotiate, but the good news is that each time an agreement has been successfully developed by two parties, the process gets easier. Taking time to think through and discuss the terms of an agreement helps foster communication between the partners. Such an activity, especially if carried out early on, sets the project on a path for success. In any case, the critical aspect of any agreement is what the parties do after the agreement has been signed; an agreement should always be seen as just the beginning of a long and mutually beneficial relationship.

Finally, a note on template agreements. Template agreements can be useful, but they should be used cautiously. They should never be considered “correct” or “ideal”: they are merely starting points for further discussion and negotiation. Template agreements cannot be used as-is; they will always need substantial modification.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

• Public-sector institutions can use a variety of agreements to both manage and protect intellectual property, regardless of whether that intellectual property is owned by the public-sector institutions themselves or by potential licensing partners in the private sector. The key issue is to allow for maximum flexibility whereby institutions can set, or negotiate, the terms that best fit the mission and goals of an institution.
• Governments can encourage partnerships to accelerate the development and use of new technologies, be they home grown or from abroad, by providing support and encouragement in the form of tangible commitments towards capacity building in IP management, licensing expertise, and technology transfer acumen.

For Senior Management (university president, R&D manager, etc)

• An institution with the capacity to draft and negotiate agreements is also able to protect, manage, and use its IP assets. Such institutions benefit themselves, as well as their partners.
• No agreement is perfect. Technology transfer officers who negotiate agreements, within the stipulations of an institution’s policy, should be given the full support by senior management, even or especially when deals are criticized from the outside.
• Senior management is instrumental in signing off on certain template agreements that can be used as the basis for negotiating deals.

For Scientists

• Unless specifically authorized to sign certain types of standard agreements, you should always have your technology transfer officers review and sign agreements. In most institutions, researchers do not have the authority to sign agreements that bind the institution.
• The ways in which agreements are implemented will significantly impact your program—and, in the long run, the mission and reputation of your institution.
• Make sure that everyone in your group knows—and understands—the obligations entered into through certain agreements. This is especially the case for material transfer agreements and confidentiality agreements.

For Technology Transfer Officers

• This chapter is an essential read for any person engaged in licensing. There are too many implications and best practices of relevance to technology transfer officers to list here.