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Creating a Win-Win Deal; Key Elements of Licensing Contracts

Creating a Win-Win Deal; Key Elements of Licensing Contracts. D.C. Toedt Wickford Georgetown Group, Inc Irene Kosturakis BMC Software, Inc . Negotiations. 12. “Scheduling order” 11. Process vs. outcome 10. Projector? 9. Timestamp all drafts 8. Term sheet 7. Playbook

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Creating a Win-Win Deal; Key Elements of Licensing Contracts

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  1. Creating a Win-Win Deal; Key Elements of Licensing Contracts D.C. Toedt Wickford Georgetown Group, Inc Irene Kosturakis BMC Software, Inc.

  2. Negotiations

  3. 12. “Scheduling order” 11. Process vs. outcome 10. Projector? 9. Timestamp all drafts 8.Term sheet 7. Playbook 6.  Reasonable positions 5. Accept redlines 4.  Explanations in footnotes, Word comments 3. Small agreements early 2. Editable documents 1. Collaborative mindset 12 Ways to Speed Up Negotiations

  4. Negotiating a sales contract with “Jerky Boy” • Importance of sales contracts • Client looking over your shoulder • Sales commissions already “spent” • May need the deal for quarterly numbers • Who should decide when to kill the deal?

  5. Drafting

  6. Contract as business plan • Who should (or might) make what happen? • Parties and their divisions, customers, suppliers, partners, financers • Competitors • Government • Brainstorm the “what ifs” in the business relationship lifecycle: • Startup; normal operations; trouble; big trouble; shutdown

  7. Contract Forms • Whose forms? • The fewer pages, the better (small fonts, 2 columns) • Use tables instead of run-on prose • Include examples, sample calculations • Concession packages – Ag / Au / Pt levels?

  8. Contract Drafting: Overall Tone • Hardball • Eventually get more of what you want? • Negotiation time • Reasonable for both parties? • E.g., mutuality of provisions • Less time to negotiate (can be important!) • Sets a tone for relationship • Better impression on execs, judge, jury?

  9. 5 Key Clauses to Consider • Licensing provisions – tightly drafted technology definitions and grant • Warranties for deliverables • Indemnities for actions • Termination rights – “out” clauses • Assignability

  10. Problem Clauses • Fuzzy warranties, no liability limits • Most favored customer • No assignment w/out consent • “Naked” caps on price increases • Promises for future deliverables • “Gross negligence,” “willful misconduct”

  11. Confidentiality Provisions • Can be crucial • Paper trail requirement? • Term of agreement? • Confidentiality period? • Freedom-to-operate clauses? • Residuals clause? • PACTIX NDA (www.pactix.org)

  12. Indemnity Provisions • Initiation of Obligations (threat, judgment) • Rights to cure (modify, replace, license, refund) • Competing obligations on code of two parties and modifications • Issues in re software used in combination • Use for intended purpose

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