Fill and Sign the Intellectual Property Joint Venturescan Rivals Turn into Form

5.16 Checklist for Intellectual Property Partnership and Joint Venture AgreementsUnlike many other corporate agreements, technology-based joint venture and partnership agreements are usually highly customized. While no checklist can contemplate every relevant joint venture or partnership topic, it is possible to list many of the core issues that often present themselves in such settings. The following list should be helpful when viewed in that context: - Identify the Intellectual Property that is the Subject of the Joint Venture or Partnership: - Patents - Copyrights - Mask works - Trade Secrets - Know-how/Show-how - Other - Describe the term or duration of the partnership or venture: - Specific duration, then unwind? - Indefinite term? - Triggered unwind (on default, elective, other events, etc.) Who owes what after any unwind - How to deal with proprietary information and post unwind confidentiality concerns - Mandatory or elective extensions of term? - Effects of change of control on term? - Effects of other exogenous or internal events on term? - Describe who will manage the venture and pursuant to what guidelines or restrictions: - Managing venturer vs. board of management - Term of service - How appointed - How removed - Duties and powers - Limitations on powers - Compliance with law - If the agreement relates to a joint development of technology, or to the joint rights to use technology, describe how the technology is to be used: - General use? - Specific or limited use? - Requirements that mark be used to protect it or its application to the underlying technology or product? - Who has rights to modify? - Who has right to transfer, make or sell? - Who has rights to make derivative works? - Include all relevant prohibitions such as prohibitions on reverse engineering activities, or whether any software code or formulas are to be safely placed in third party escrow arrangements - Describe grant-back rights or mandatory grant backs - Relative ownership of the venture and its technology by the parties:- Percentage ownership of each venturer - Capital contribution of each venturer - Who manages the venture? - Voting rights or other control features - Supervisory board or board of directors - Supermajority votes required for certain actions? - Permitted and non-permitted activities - Assignments of interests - Change in management structure requirements - Character of ownership interest-equity, debt, hybrid, etc - Describe in detail the character of initial contributions to the partnership or joint venture: - Tangible property? - Intangible property (such as patents, know-how, trademarks, etc.) - Exclusive transfer or only transfer of certain rights? - Reversionary features? - Duration of contribution and rights of the parties to use? - Title polices if real property included - Address tax implications - Describe any intentionally unresolved business points: - Acknowledge business reason for unresolved points (e.g., timing, uncertainty, lack of ripeness, etc.) - Describe mechanism for addressing - Describe timing for addressing - Describe process for addressing - Describe process for resolving deadlocks - Describe consequences of not addressing - How are future technology modifications to be handled? - If the technology is modified, who has rights to the modified work? - Are any cross licenses or other rights to use contemplated? - If licenses or cross licenses are contemplated, protect against licensing competitors or others that one of the joint venture partners would find unacceptable. Be as specific as possible. Many disputes arise from this issue. - When will an enhancement or modification be considered a new development or product? - Will development costs be shared? - Will development activities be joint or separate? - Spell out in as much detail as possible the terms and conditions of any rights to license or sublicense either the technology or enhancements or derivations thereof: - Competitor exclusions - Proper scope and duration of such licenses or sublicenses - Consent rights? - Automatic termination for violation of this or other provision? - Destiny of the sublicense upon any termination of sublicensor rights in the intellectual property - Define the scope and character of licenses and other rights in the technology as to exclusivity, geography and subsidiary or downstream rights:- Exclusive or non-exclusive - Geographic scope of license - Applications to which the license applies - Do affiliates of licensee enjoy licensing rights? - Right to sublicense with or without royalty? - What about conflicts (each joint venturer wishes to sublicense the same party)? - Be specific about ALL restrictions that apply to trademarks associated with the technology to be exploited and derivatives thereof: - Right to use the trademark - Retained rights of mark owner to approve use of mark - Retained rights of mark owner to approve quality of the products used with the mark - Forfeiture of mark rights for abandonment - Contemplate and address financing-related issues: - Who can grant a lender collateral security rights in the intellectual property? - What remedies will prevail in the event of default? - If collateral security interests cannot be granted, how will joint venture or partnership activities be funded? - Are partners subject to capital calls? - If subject to capital calls, how is new money in structured (e.g., equity, debt, hybrid, etc.) - If subject to capital calls, what are remedies on default? - Can capital call defaults be cured? If so, on what terms and with what consequences? - Mutually agreed budget for joint venture project - Effect of costs in excess of budget? - Sharing of revenues in excess of budget? - Define all restrictions on assignment, whether voluntary or by operation of law: - Sublicenses permitted, and if so, on what terms? - Further sublicensing permitted? - Transfers to affiliates permitted? - Transfers to approved transferee list, or any transferee? - Trailing liability of original venturer for reps and warranties, financial obligations, indemnity, etc.? - Consequences of transfer or assignment by operation of law, such as in bankruptcy or foreclosure? - Consequences of change of control of original joint venture partner? - Approval rights on voluntary transfers? If more than two venturers, then what percentage consent is required? - If royalties are involved, address the following: - How royalties are calculated - Base royalty terms - How royalty-bearing sales or revenues are calculated - Are affiliate company transactions included or excluded? - When royalty payments are due - Currency in which royalty payments must be made - Allowances, exclusions, bad debt reserves, etc. - Mandatory or permitted discounts? - Minimum sales or royalties to avoid licensure right forfeiture - Up-front payments vs. periodic payments - Credits and charge-backs - Promotional exclusions or credits - Periodic audit rights or certifications by licensor - Periodic outside third party audit rights - Spell out any mandatory development or exploitation obligations or requirements (and consequences): - Required capital expenditures? - Required technical hiring or development activity? - Milestone requirements to measure development progress? - Expansion into new domestic or foreign markets? - Obligations to promote - Minimum sales requirements - Credits against royalties or other allowances for promotion and expansion? - New or diversified applications of technology? - Use of outside labs or other third parties to facilitate development? - Describe any rights of first refusal, pre-emptive rights, rights of first negotiation, etc.: - Define scope of all such rights - Explain purpose or business intent underlying these rights (as an aid to enforceability) - Duration of rights? - Changes over time? - Formula pricing or third party appraisals or other mechanisms for determining the economics associated with the exercise of such rights? - Include standard representations and warranties: - Organization, authority and enforceability - Title to assets being contributed to the venture - Non-infringement and related IP representations - Specific representations relevant to the specific venture, type of business, activities, properties, etc. (probably will be similar to standard rep package from an asset purchase and sale agreement in the same or a related industry) - Set forth all confidentiality, non-disclosure and related concerns as apply during the venture and after its termination: - Permitted disclosures - Escrow requirements for source code - Internal procedures for safeguarding of confidential documents and information - Required employee agreements or policies - Employer liability for breach? - Required work-for-hire arrangements with employees - Marking or labeling requirements for confidential information - Duration of obligations - Post-termination character and duration of obligations - Consequences of breach - Consequential damages? - Injunctive relief - Caveat anti-trust and related prohibitions on competitor information sharing, even in context of a joint venture or partnership (seek counsel with special expertise in the area) - Describe dispute resolution procedures: - Mediation - Arbitration - Litigation - Governing law - Forum (whether for arbitration, litigation or mediation) - Consider alternating geographies for multiple mediations or arbitrations to take into account geographic location of each venturer - Binding or non-binding - Exclusive or non-exclusive - Means for enforcement - Loss of rights or interests in venture on default - Liquidated damages provisions - Include standard indemnity provisions appropriate to industry and circumstances: - General indemnity - Specific indemnity- Baskets - Caps - Durations - Special provisions for counsel and expenses - Miscellaneous Provisions: - Assignability - Governing law (if not addressed above) - Third party rights - Entire agreement - Disputes (if not addressed above) - Other customary provisions