1 ip4inno Module 5B Workshop – IP LizenzierungDrei Übungen zu Lizenzverhandlungen im Technologiebereich This module is intended to be used together with the ip4Inno module 4C – IP licensing. However, this module can also be used independently, provided that participants have at least basic knowledge of IP and technology licensing agreement negotiation. Please also note that the ip4Inno Modules 4B – Building a Business and 4D – IP Valuation for Technology Managers are relevant to some of the matters discussed here and can be useful to participants in this workshop. Name des Vortragenden Ort & Datum
2 ip4inno ist ein Gemeinschaftsprojekt von:Der Europäischen Kommission (EC), DG Enterprise & Industry Dem Europäischen Patentamt (EPO) 19 Konsortium Partner im ersten ip4inno-Projekt Dieses Modul wurde verfasst von: Theo Stamatiadis - Theia Mit finanzieller Unterstützung von EC und EPO Deutsche Version erstellt durch TUM-Tech GmbH, This slide is mandatory. The fact that the EC and EPO are the sole funders of the current activity must be mentioned. This module was drafted for ip4Inno by Theo Stamatiadis, legal advisor for the consultancy Theia (www.theia.eu) and for the private research centre CRIC (www.cric.cat). For information, the partners in the first ip4Inno project ( ) were: European Patent Office Hungarian Patent Office Portuguese Patent & TM Office National Board of Patents and Registration of Finland Spanish Patent Office INPI, France State IP Office of Croatia Turkish Patent Office Danish Patent Office European Business and Innovation Centres Network CRP Henri Tudor, Luxembourg FUNDITEC, Spain IWT - Flanders Fraunhofer TEG IEEPI, Strasbourg METU - Technopolis, Turkey Fundación EOI, Spain Universidad Politécnica de Madrid University of Alicante 2 2
3 Haftungsausschluss! Diese Trainingsunterlagen befassen sich nur im Allgemeinen mit geistigem Eigentum (intellectual property) und Geschäftsstrategien. Bitte verlassen Sie sich nicht auf die Trainingsunterlagen, wenn Sie bestimmte Geschäfts- oder Rechtsentscheidung-en treffen. Bitte kontaktieren Sie hierfür entsprechende Spezialisten. The need for the disclaimer is obvious. A trainer can add a bit of humour here by saying: "This seminar is not intended to make anyone into an IP expert. We are not training you to become patent attorneys! Rather, please think of this course as "intellectual property First Aid". And what is the purpose of First Aid? - "To keep the patient alive long enough for professional help to arrive." that is what we hope to achieve with you - to make you IP paramedics. When clients come to you with a business issue, we hope you will know enough about IP to be able to spot an IP problem or opportunity which the client has missed, and prevent them from making the situation worse, while referring them to appropriate legal advisors.
4 Die Notizen zu den Slides sind ausschließlich für den Trainer gedacht.Bitte löschen Sie dieses Slide vor dem Workshop! The workshop under this module consists of a role-play scenario based on the negotiation of a technology licensing agreement between a French and a German company. The trainer can separate the participants in two groups (preferably of maximum 5 participants) and guide their negotiation process. Alternatively, the trainer can play the role of the French or German negotiator and negotiate with the participants. In order to facilitate the timely execution of the workshop, one sole scenario is used and broken down into three different exercises, dealing with parts of the license. Overall speaking, the workshop shall develop as follows: At the beginning of the workshop, in slide 5, the trainer shall give participants 5 to 10 minutes to read their respective text and understand their negotiating position. Moreover, the trainer shall explain the overall case (text before group-specific information) and put participants in context. At slides 6, 10 and 14, the trainer shall give participants additional 5 to 10 minutes to read their respective text and prepare for each exercise. Slides 7 to 9 constitute the first exercise, dealing with the subject matter, type and scope of the license as well as sublicensing rights. Slides 11 to 13 constitute the second exercise, dealing with the valuation of the technology and the price of the license. Slides 15 to 17 constitute the third exercise, dealing with the term and termination of the license, as well as the responsibilities of licensor and licensee. The trainer shall endeavour to complete the negotiation under each of the exercises within 10min approximately, during which participants are expected to negotiate. Thus, the whole workshop shall be completed in approximately 45min. During the exercises, the trainer shall guide the negotiations and feed the debate using the information provided in the slide notes. Although the exercises are separate, the trainer should try to end up by linking the different matters under discussion. An agreement on exclusivity can have an impact on royalties, an agreement on the subject matter can affect the parties’ obligations, etc. Therefore, the trainer shall endeavour to demonstrate how a negotiation of the agreement as a whole can provide better and faster results, instead of blocking negotiations on a particular matter. The “solution” provided in slide 18 is a mere suggestion. If the negotiation has led to a different result, the trainer shall not hesitate to present the solution as an alternative (and not as the “correct” answer to the exercise). In some of the following slides (5, 6, 10 and 14, as above explained) a separate text is destined to the French and German negotiator, which the trainer can distribute to the participants as is or explain orally, adding more elements. One side should not have access to the other side’s instructions, since part of the exercise is identifying each other’s interests and seeking commonly accepted solutions.
5 Die Geschichte Ein deutscher Hersteller von Kunststoff-GegenständenEin patentiertes Plastik-Spritzgussverfahren A company in France manufactures all kinds of household equipment; from vacuum cleaners and juice extractors to brushes and dust pans. The company has a solid position on the French market. Recently, it has established affiliated companies and manufacturing units in Spain and Portugal as well. In a commercial fair, the French company becomes aware of a new injection moulding method owned and used by a German manufacturer of plastic components. The new method allows to substantially increasing the pressure in the moulding of thermoplastic articles. The method has several positive effects on the properties of the resulting products, while it also presents technical advantages likely to reduce manufacturing costs. The German company has protected its method by a patent. Following initial contact and discussions, the French and the German company are now negotiating a license. Information for Group 1 You are in the position of the French negotiator. Your technical staff has already informed you that the technology is very suitable to the company’s work. Nevertheless, the machinery used by the German company is different; therefore it would take some time and money to adapt the method to your company’s processes. The assistance of technical staff from the German company would be necessary. In fact, the plan of your company is to initially test and apply this method in France. If the results are as good as expected, it plans to apply the new method also to its units in Spain and Portugal. Moreover, during the initial discussions, the German company has informed you that it also possesses detailed scientific data resulting from testing of the method with many different materials. Indeed, the German company applies the method at very precise temperature and pressure conditions for different types of materials, so as to obtain optimum results from the resulting products and speed up the whole process. Information for Group 2 You are in the position of the German negotiator. Ever since your company has started using the new method, it has increased its market share significantly. Your patent is protected throughout the EU. Moreover, you have in place a very strict confidentiality policy for protecting the secret know-how related to the operation of the patented method. Only a few technicians are allowed access to the manufacturing specifications per type of material and the relevant data are stored only in a few company computers. Physical access to parts of your manufacturing unit is also restricted to specific members of your staff. You are interested in licensing the product to the French company, as its market share is considerable and it has good prospects of expansion. A good economic deal for the license would allow you to make an interesting additional profit from the technology. At the same time, you consider that the technology has a strong potential for many applications and that possibilities of further licensing should be kept open. In particular, your company has already been in contact with other companies in southern Europe (Italy, Spain and Portugal) which expressed an initial interest to the technology and are also likely to request a license in the near future. Ein französischer Hersteller von Haushaltsgeräten
6 Übung 1 Was ist der betrachtete Gegenstand? Welche Art von Lizenz?Welche geographische Abgrenzung? Welche Unterlizenzierungsrechte? The discussion starts with the subject matter, type and geographical scope of the license. Information for Group 1 - What you need is a license to the patented method as well as to all related know-how and data. You need the Germans to define the secret data as precisely as possible and request them to include a copy of the data in annex to the licensing agreement, under a non-disclosure obligation. Otherwise, you cannot be sure that the data is accurate nor that the German partner will provide all necessary data and know-how. -You want an exclusive license to use the method in France, Spain and Portugal. The use of this technology in household equipment manufacturing can bring about important benefits and a competitive advantage. You are not sure whether you will end up using the technology at your affiliates in Spain and Portugal; but you surely want to have an exclusive option to do so if the experience in France is positive. The technology promises to have a long life cycle, therefore you want the exclusive rights to last for several years. Information for Group 2 -According to management instructions, in no case can you provide the other party with information on the secret know-how and data before signature of the agreement. This is top secret for your company. However, you can guarantee that the data is accurate and that you can provide detailed information on how to use the method with different types of materials. All testing and the related data are described in a series of files that you posses. There are also restricted copies of a manual that indicates optimum temperature and pressure conditions for applying the method to different materials. In addition, your senior technicians have additional know-how as to the practical use of the method, which is also secret. -You prefer the license to be non-exclusive. The technology has potential for many applications and possibly other potential licensees will appear from the countries that interest the French partner. If you were to license the technology exclusively you should at least obtain a good remuneration in return.
7 Übung 1 Was ist der betrachtete Gegenstand? Welche Art von Lizenz?Welche geographische Abgrenzung? Welche Unterlizenzierungsrechte? The French negotiator shall request to identify as subject matter of the license both the patent (for instance, by indicating the title and patent number) and the secret data and know-how. The French negotiator shall seek an alternative solution to the problem regarding the secret information. Since the Germans are unwilling to step back from their position and disclose the data and know-how beforehand, the French negotiator may propose an identification of the relevant data and know-how as specific as possible. For instance, the licensing agreement may specifically identify: -All the documents and files describing the results of testing of the method with different materials, temperatures and pressure conditions. -The specific manual identifying optimum conditions for using the method with the materials that the French company is using. -Access to the specific know-how for operating the method, to be acquired by training and demonstrations at the manufacturing unit in France, as the method is adapted to the French company’s processes. In exchange, the French partner may note that at a later stage of the negotiation (see Exercise 3) they shall request from the German company to undertake additional obligations, so as to ensure that know-how and data are disclosed and transferred properly. For instance, the German partner may be required to set up a plan for adapting the technology to the French company’s manufacturing processes and running test operations within specific time limits. Moreover, the German partner may be required to provide a specific number of experts during specific time periods in order to execute the necessary tasks. Of course, the German partner can point out from its side that such undertakings will have an effect on price. 7
8 Übung 1 Was ist der betrachtete Gegenstand? Welche Art von Lizenz?Welche geographische Abgrenzung? Welche Unterlizenzierungsrechte? The German partner believes that its technology has a strong potential in many industries and is interested in the possibility of granting further licenses to other companies, even in the countries that interest the French. In particular, the German partner has already been in contact with other companies in Spain and Portugal interested to the technology. However, exclusivity is crucial for the French partner: -The German partner may agree to grant an exclusive license to the French for the first years of exploitation of the technology. This will help the French partner develop undisturbed its initial exploitation plans. However, this would “block” the licensing options of the German partner for some time and other potential licensees may seek alternatives, thus limiting the German partner’s opportunities for licensing. -The German partner may grant a long term exclusive license for use of the technology for manufacturing household equipment products. A list of products for which the French partner wants the license to be exclusive can be attached to the licensing agreement. This would clearly satisfy the needs of the French partner, but it would also affect the price of the license, since the exclusive character would cover a longer period. Moreover, such an arrangement would again “block” any options of licensing the technology to (some) other companies for the German partner, the ones that compete with the French company in the relevant markets. -The German partner may also agree to grant a long term exclusive license, but instead place some commercialisation milestones to the French partner. If a level of commercialisation for the technology is not achieved within specific time periods (e.g. within 3, 5, 7 and 10 years after signature of the agreement) then the license would become non-exclusive. This would allow the German partner to ensure that the French partner reaches a satisfactory level of commercialisation. If not, then the license would become non-exclusive and other companies may become licensees and help achieving a more successful overall commercialisation for the technology. The French partner could agree with this, provided that it is confident to achieve successful commercialisation of the technology over time. -A combination of the above options is also possible. Thus, the German partner may propose to grant an exclusive license for the manufacturing of specific products that interest the French partner, provided however that the latter is capable of providing and complying with a satisfying commercialisation plan for the technology, failing which the license would automatically become non-exclusive. In all cases, the German partner may note that any exclusive rights agreed will have a considerable effect on price, to be discussed later (Exercise 2). In particular, and considering that any agreement on exclusivity would limit the German partner’s further licensing options, minimum royalties or marketing milestones may have to be agreed. Finally, both partners shall keep in mind that the issue of exclusivity can be tough to deal with and possibly leave this matter open until other aspects of the license are discussed, in particular the price and payment methods. What seems to be a no-go point at this stage may become an acceptable arrangement later. 8
9 Übung 1 Was ist der betrachtete Gegenstand? Welche Art von Lizenz?Welche geographische Abgrenzung? Welche Unterlizenzierungsrechte? The French negotiator will request a license to use the patent and secret know-how in France, Spain and Portugal. Moreover, the French negotiator shall request the right to sublicense the technology to its affiliates in Spain and Portugal. The German partner may agree on that point. However, it will want to know when the French partner is expected to decide whether the technology will be used in Spain and Portugal, especially if exclusive rights are to be granted. The German partner may thus propose a restriction to the exclusive character of the license, going back to the previous point. It may propose to the French company a time limit for exploiting the technology in Spain and Portugal. For example, if the French company does not manage to use the technology in Spain and Portugal during the first 3 years after licensing, the license will become non-exclusive. Alternatively, the German partner can also ask for minimum royalties, something to be discussed later (Exercise 2). 9
10 Übung 2 Welche Bewertung der Technologie? Einmalzahlungen?Welche Lizenzgebühren und welche Ausgestaltung? Different aspects of the license previously discussed have an impact on price and both partners have been surely making their estimations and calculations. During negotiations, every feature offered or requested is priced, even if the partners do not necessarily put forward their proposals on specific numbers and sums directly. Some arguments have already been exchanged and the partners enter now a more detailed discussion regarding the price of the license. Information for Group 1 -You are positive that the technology is suitable and that it will greatly benefit your manufacturing processes. If cost savings (your technical team roughly calculates 15% savings in manufacturing costs) and improved quality are as expected, you are confident to increase sales and profit margins. You are able to provide sales figures to the Germans, as well as a business plan for the future use of the technology, which prove how interesting the operation can be for both companies. You do not necessarily want to (or can, depending on management instructions) share all such information, but you can surely demonstrate to your German partner that you reasonably expect to achieve a very successful commercialisation for the technology. -Nevertheless, the technical staff informs you that the implementation of the method to the company’s processes will take at least six to eight months, provided that the German partner delivers all data and know-how properly and on time. Moreover, the cost of this operation can also be considerable. According to rough initial calculations, the adaptation and installation of the technology may cost anything between and euro. This is just a range estimation of costs, but in any case you do not want to make any big investments on the license until the technology is operating properly at your manufacturing units. -Similarly, you do not want any minimum royalties to apply, at least for the first years of use of the method. This is not a “red line” for your negotiation, but it would allow you to rapidly recover the initial investment for implementing the technology. Information for Group 2 -You have great expectations for the technology and want to make sure that its exploitation generates a minimum income. You know your method is efficient and, according to your searches, there are no similar methods the French company could obtain elsewhere. Moreover, after the initial discussions between your technical team and their French peers, you calculate costs savings for the French company to be much higher than they suggest, possibly reaching up to 50% (while they roughly calculate a mere 15%). -If the French partner requests exclusivity, you want a lump sum to apply at the signature of the agreement. The higher the lump sum, the more exclusive rights you can grant. You also want a lump sum if and when the technology is implemented in Spain and Portugal. -Moreover, you want minimum royalties to apply for every year of licensing. You believe that this will be an incentive for your French partner to use the license option for Spain and Portugal as rapidly as possible.
11 Übung 2 Welche Bewertung der Technologie? Einmalzahlungen?Welche Lizenzgebühren und welche Ausgestaltung? The trainer may request the two Groups to provide examples of criteria to use for valuating the technology, as well as any other arguments that could affect the final valuation. This is not a discussion about figures but rather of criteria and other factors that can be taken into consideration in evaluating the technology. For valuating the technology, the parties may: -Use the income method. If the French partner provides a detailed calculation of cost savings and sales price for products manufactured with the new method, the parties can calculate the French partner’s gross profit. On the basis of that they can apply the 25% rule to get a first indication of the royalty rate that could apply. -Use the market method and seek information on similar licensing agreements and royalty rates in this business sector, so as to obtain an additional reference. -However, there are no similar technologies on the market. Therefore, the cost method cannot really be applied, since there are no other technologies that the French partner could obtain nor has it capacity to develop a similar technology by own efforts. The initial valuation made by the parties may be further discussed on the basis of arguments regarding the value of the technology in this particular transaction. The German partner may indicate: -That the technology is tested, since the use of the method in manufacturing its own products has been proven effective. -That the fact that it uses the technology itself makes it particularly valuable to its business. Among others, secret information will be provided to the French company. -That there are no other technologies in the market as effective for the purposes required. The French partner may indicate: -That a considerable initial cost and time will be needed to implement the technology -That it is capable of exploiting the commercial potential of the license and generating profit both for itself and the German partner in the form of royalties. 11
12 Übung 2 Welche Bewertung der Technologie? Einmalzahlungen?Welche Lizenzgebühren und welche Ausgestaltung? The two partners have different views regarding lump sums. The German partner wants a lump sum to be paid at signature of the agreement. On the contrary, the French partner would prefer not to make any investments before starting to use the method in its work. The solution might be that the French partner pays the first lump sum after the method is implemented and operating, since this would take only 6 to 8 months from licensing. The German partner may agree and propose to establish that the lump sum will become payable at the latest 8 months after the licensing agreement is singed, even if the French partner has not managed to implement the method by that date. The French partner will remind the German partner that some additional responsibilities shall be established with regard to the transfer of secret data and know-how, as well as expert support, to be discussed later (Exercise 3). Moreover, the German partner requests lump sums to apply also if and when the technology is applied in Spain and Portugal. The French may initially agree, but note that the negotiation on royalties will also affect the amount of the lump sums. 12
13 Übung 2 Welche Bewertung der Technologie? Einmalzahlungen?Welche Lizenzgebühren und welche Ausgestaltung? The German partner wants to negotiate minimum royalties for every year of licensing, so as to speed up the implementation and use of its method in all three countries. The French partner, on its side, does not want minimum royalties to apply for the first years of commercialisation. Several options are possible: -The German partner may agree to apply minimum royalties only after the first few years of commercialisation, but in return request an even shorter time period for the French partner to start using the method in Spain and Portugal. -The French partner may accept minimum royalties, but request from the Germans to reduce or even eliminate the lump sums for implementation of the method in those countries, so that it can cover the cost of implementing the technology at its other two manufacturing units. -The parties may also agree to adjust the amounts of lump sums and minimum royalties, so as to allow the French to support the initial investment of implementing the method in the other two units. For example, minimum royalties can vary, starting from a lower rate for the first year of commercialisation and growing as years go by. In addition, the French may agree to reduce the time limit for implementing the technology in Spain and Portugal. 13
14 Übung 3 Was soll die Laufzeit der Lizenz sein?Welche Verantwortungen für den Lizenzgeber / Lizenznehmer? Gründe für eine Kündigung? In combination with all the matters discussed previously, the parties will discuss the term of the license, undertake specific responsibilities and identify reasons for early termination. Information for Group 1 -Depending on previous discussions, the license may be exclusive for the countries that interest you and/or for a specific time period. The managers of your company insist, in all cases, that the technology can be interesting to your competitors as well, especially if its efficiency is proved by your efforts, and that you should preserve a competitive advantage towards them. -Moreover, you want to negotiate a license for the lifetime of the patent, whether exclusive or not, since you will have to modify your industrial processes in order to use the method. -At the same time, if the German partner has established a minimum time limit for implementation of the method in Spain and Portugal, you want to reduce the risk of not achieving this on time and losing your exclusive right. -You also want to remind the German partner of everything that you need to implement the method in your processes and specify the relevant obligations in the agreement. -Finally, you want to establish some conditions for early termination of the agreement. In particular, if minimum royalties apply you want to have the option of withdrawing from the agreement at any time. Moreover, you may consider cases in which an “exit penalty” will apply if the German partner fails to comply with some of its obligations. Information for Group 2 -Depending on previous discussions, you may agree to grant an exclusive license for the first years of commercialisation. However, you want to make sure that your French partner will rapidly initiate exploitation of the technology in Spain and Portugal. -Overall, you are ready to grant a non-exclusive license for any duration, including the lifetime of the patent. At the same time, you want to protect yourself from the risk of losing money if for whatever reason the French partner’s business decreases in such a long business relationship. -You want to make sure that the confidential information, data and know-how that you will disclose to the French partner are protected and also to establish liabilities for the French partner, should it fail to protect confidentiality. -Moreover, you want to be informed of the use of the technology by the French partner and its affiliates. -Finally, you want to establish some conditions for early termination of the agreement. Moreover, you may consider cases in which an “exit penalty” will apply if the French partner fails to comply with some of its obligations.
15 Übung 3 Was soll die Laufzeit der Lizenz sein?Welche Verantwortungen für den Lizenzgeber / Lizenznehmer? Gründe für eine Kündigung? The two parties shall discuss the period of time for which the license will be exclusive. The German partner may agree to grant exclusivity for the first years of the license. If the license is exclusive only for some years, the French partner shall request a most favourable license clause to apply. Thus, when the license becomes non-exclusive it will at least make sure that its competitors will not obtain a license under more favourable conditions and threaten its market. At the same time, the French partner is concerned of losing its exclusive option for Spain and Portugal, if it does not manage to implement the method in the time limit proposed by the German partner. Therefore, it shall propose an option for renewing the exclusive character of the license if it can prove, for instance, that plans to implement the technology in those two countries are underway. The German partner may agree on the possibility of renewing the exclusive character of the license. However, it can request the payment of an additional lump sum for the renewal to become effective. The German partner may also agree that a non-exclusive license will be granted for the lifetime of the patent. At the same time, linking this matter with royalties, it may propose that the royalty rate grows over time and/or that minimum royalties apply throughout the duration of the license. This will allow the German partner to protect its interests if the French company’s sales shrink for any reason. Regarding the secret know-how of the German partner, the license should reasonably be infinite. Thus, even after the patent expires, the French partner should have the right to use the German partner’s secret know-how for operating the technology, while the German partner should continue to perceive royalties for the use of its secret know-how by the French partner. Therefore, the agreement on the term of the license should consist in two parts, one regarding the patent and one regarding the secret know-how. 15
16 Übung 3 Was soll die Laufzeit der Lizenz sein?Welche Verantwortungen für den Lizenzgeber / Lizenznehmer? Gründe für eine Kündigung? The French partner shall specify in the agreement the German partner’s responsibility to: -Provide the reports related to the testing of the technology and the relevant data. -Provide technical staff to work on the French partner’s premises, help implement the method and best practices and pass on the related know-how. The French partner may establish time-limits for the German partner to provide such information and technical support. This will be particularly important if the German partner requests the first lump sum payment to be due in few months after the signature of the licensing agreement. The French partner will want all support necessary to implement the method by the time the lump sum becomes payable, since its objective is to start with payments once the technology is actually being used in its processes. Thus, for instance, the German partner may undertake: To provide a detailed plan for adapting the technology to the French partner’s manufacturing processes within 3 months from signature of the agreement. To implement the installation of the technology to the French partner’s processes within 2 months after elaboration of the plan. To provide 5 expert days per month during the first quarter of operation, as well as 1 additional expert day every four months thereafter, in order to ensure correct installation and operation of the technology. The German partner would reasonably accept such undertakings, but it should also point out that the performance of the above mentioned tasks would have an impact on price. From its side, the German partner would like to establish strict confidentiality obligations for the French partner, since it will have to grant access to its secret data and know-how. Same as the German partner protects the secrets in its own work, it may request the French partner to: -Restrict access to the confidential information only to the staff that needs to acquire such information to operate the method, and put in place strict confidentiality agreements with such staff members. -Restrict copies of confidential information, data and access to it. -Restrict access to parts of the manufacturing units where the method will be implemented. Moreover, the German partner will request the French partner to provide financial reports on the calculation of royalties and allow for an inspection of its accounts at the request of the German partner. Moreover, the German partner may request technical reports to be provided regarding the progress of implementing the technology in France and later in Spain and Portugal, so as to make sure that lump sums are paid when due. The French partner would agree to provide all these reports, provided they are treated as confidential by the German partner. 16
17 Übung 3 Was soll die Laufzeit der Lizenz sein?Welche Verantwortungen für den Lizenzgeber / Lizenznehmer? Gründe für eine Kündigung? The French partner may put forward: -That, in case that the German partner does not provide the data and know-how needed to operate the method properly, it shall have the option of terminating the licensing agreement without making any payments. Moreover, it may argue that in such case the German partner would also provide compensation for any costs incurred by the French in preparing to implement the method. Finally, an “exit penalty” for the license may apply in this case, if some conditions are met (e.g. if the French partner can demonstrate that the German partner failed to provide necessary information and support in bad faith). -The option of terminating the agreement if, for whatever reason, the German partner fails to maintain the patent valid in the countries of interest. In addition, it shall require the right to use the secret know-how even after the termination of the license, since such know-how will be already implemented in its manufacturing processes. The German partner from its side: -Shall reserve the right to terminate the agreement if the French partner fails to pay lump sums and royalties. The French partner may argue that if the lump sum for implementation of the method in Portugal or Spain is not paid, the license should terminate only in respect to that country. -The German party may agree to that, but instead clearly provide that any failure by the French partner to pay royalties and minimum royalties will lead to a termination of the agreement. -The German partner may also put forward that an “exit penalty” for the license shall apply, if it can demonstrate that the French partner has intentionally modified its financial reports and accounts so as to deceive the German partner and pay less royalties than the ones actually due under the agreement. -Finally, the German partner may also provide for the termination of the license and an exit penalty if the French partner fails to protect confidential information, whose value is crucial for the technology. 17
18 Eine Lösung Der französische Partner erhält eine teilexklusive Lizenz im Einklang mit seinen Plänen und eine Meistbegünstigtenklausel Dem deutschen Partner gelingt es, mehrere Einmalzahlungen und Mindest-Lizenzgebühren geltend zu machen Dem französischen Partner gelingt es, die Lizenzgebühren so zu vereinbaren, dass das anfängliche Risiko der Implementierung ermöglicht wird The trainer can lead the parties to the solution presented in this slide or, if the negotiation has reached a different agreement, present it as an alternative. -The license covers the patent and related know-how. -The license is exclusive for the first 3 years of commercialisation. Upon payment of a lump-sum, the exclusivity can be renewed for another 3 years in Spain and Portugal, provided that the French partner can prove that it has initiated plans for implementation of the method in those countries within the initial 3-year exclusive period. -The non-exclusive license shall last for the lifetime of the patent. In addition, the license shall be indefinite regarding the secret know-how and data of the German partner. -The license covers the three countries, France, Spain and Portugal. -The license includes a most favoured clause, in case the German partner licenses the technology to companies competing with the French partner. -The French partner has the right to sublicense to its Spanish and Portuguese affiliates. -A lump-sum is due as soon as the technology is implemented in France and at the latest 9 months following signature of the agreement. -In addition, lump-sums are due by the French partner if it decides to sub-license the technology to its Spanish and/or Portuguese affiliate. -Minimum royalties apply, as from the first year. -However, the royalty rate is kept only at 1% of net sales for the first years of commercialisation, increasing progressively until reaching a stable 7% as of the 7th year of commercialisation. -The German partner has the obligation to provide the secret data and know-how, as well as training and technical support. These obligations shall be delivered under a strict time schedule for the first months of licensing, so as to allow the French partner to implement the technology rapidly. If the German partner fails to comply, it shall compensate the French partner for the loss and possibly pay an exit penalty, if the licensing relationship if terminated. -The French partner undertakes to adopt the same measures as the German partner in order to protect confidential information. Failing to adopt such measures resulting in loss of information would entail the French partner’s responsibility to compensate the German partner for the loss, as well as termination of the licensing agreement with an exit penalty for the French partner. -The French partner undertakes to provide financial and technical reports regarding the implementation of the technology at its different units and to allow audits and inspections, both financial and technical. If the French partner is found to modify the reports in order to reduce royalty payments or deceive the German partner as to the implementation of the technology in Spain and Portugal, an exit penalty will apply. Finally, the trainer may ask participants of both sides if they are happy with the outcome of the negotiation; which additional aspects they think that they should have taken into account; and what they would have done differently if they had to negotiate such a deal again. During this final discussion, the trainer may remind participants of the negotiation hints of ip4Inno module 4C (IP licensing) and show, based on the experience of the workshop, how such negotiation guidelines can help reaching an agreement satisfying both parties.
19 Vielen Dank für Ihre Aufmerksamkeit!