Relevant clauses for license agreements

Background:

A European company in the green technology field with an advanced technology for waste management currently manufactures its products in Europe and is willing to enter into a license agreement with a Malaysian company to grant licenses for manufacturing, distribution and selling of its products with non-transferrable exclusive and sole right for a period of five years. The parties enter into negotiations of the main terms of the deal to be inserted in the written agreement.

Actions Taken:

According to the terms of the license agreement, it is foreseen between the parties that a proposal for changing or adapting the products, changing or adapting parts of the products, and/or changing or adapting the design of the product may take place. As result of this activity, the complete drawings and specifications of the products and components, manufacturing and quality control procedures, label and identification and all other incidental requirements to develop a new product prototype, shall be provided from the European company to the Malaysian company.

Outcome:

Both parties agreed that those changes or adaptations to create a new product prototype shall be subject to the signature of a separate and binding Non-Disclosure Agreement for each time the charges or adaptations shall be required.

Both parties also agree that any rights of intellectual property concerning the products shall be exclusively owned by the European company, who will always be the owner of all changes or adaptation to the products. In the event, any change or adaptation would create new registrable intangible assets, the Malaysian company shall in no cases file for design or patent applications in Malaysia or elsewhere.

IP Lessons

• Enter into written agreements with your local partners to grant licenses for manufacturing, distribution and selling and insert IP clauses in these agreements
• Consider always signing Non-Disclosure Agreements (NDAs) with your partners should any new  drawings and specifications of the products and components in relation to the manufacturing would be disclosed
• Include clauses in your agreements in relation to existing and future intellectual property to achieve protection with a clear provision of ownership.
• Make sure you define the duration of the IP licenses in a suitable matter according to the duration of the registered IP you are licensing to maximise the revenues.

Source: southeastasia-iprhelpdesk.eu