31st January 2012

Geldards LLP: Collaboration Agreements – Top Tips

Collaboration Agreements: Top Tips

When working with another party in research and development it is important to have in place a sturdy and well drafted collaboration agreement. With that in mind, here are Geldards’ top tips for getting it right:

1. Do your due diligence

Who are you actually contracting with? Do they have a proven track record and are they financially sound? Do they own the rights they say they do (ownership issues can often arise if you are contracting with an academic institution or if consultants have been involved at any stage) and do they have the authority to agree to their obligations under the agreement?

2. Get the basics right

Make sure that it is clear from the agreement who is doing what and by when. What is the project exactly? How will it be run and by whom? Include as much detail as possible, using separate schedules to list each party’s obligations. Also consider what will happen if things don’t go to plan.

3. Intellectual Property Rights (IPR)

Consider what IPR already exists and who it is owned by. Can the other party use such IPR and for what purpose?

With regard to any IPR that’s created as a result of the collaboration, there are no set rules here – the rights each party will have are likely to be dictated by the aims and objectives of the collaboration. The most important thing is to carefully consider: (i) what rights you are likely to need and to ensure that this is reflected in the agreement; and (ii) the permutations (both legal and commercial) of granting the other side the rights they wish to have. As a rule of thumb, joint ownership is best avoided since it requires the parties to reach agreement on how to exploit the results of their collaboration.

4. Competition law issues

Collaboration agreements can be problematic from a competition law point of view since they often involve competitors (or potential competitors) and also because many of the provisions that might be desirable from a commercial perspective (such as exclusivity, field of use restrictions and non-compete obligations) are likely to restrict competition in the market place. The law in this area is complex and so it is always advisable to seek expert legal advice before signing on the dotted line.

5. Financial arrangements

Clearly, there will be a number of financial issues to resolve. You will need to consider how the project is to be funded and the parties’ respective contributions. It will also be worth investigating whether grant funding is available. You will also need to consider who will bear the cost of maintaining and protecting IPR – both existing rights and rights resulting from the collaboration. For example, who will be responsible for the costs relating to any applications for patent protection, registration fees and costs involved in defending IPR? In addition, how will any profits generated from the exploitation of IPR be shared?

6. Confidentiality and publishing rights

Confidentiality is likely to be important as: (i) both parties may be disclosing at least some information that is confidential (e.g. know-how); and (ii) the disclosure of information before a patent application has been filed may mean that an invention becomes unpatentable. It will, therefore, be very important to include clear and workable obligations of confidentiality for all parties. If an academic institution is involved in the collaboration, they may want the right to publish information relating to the research and the scope for such an exception needs to be considered.

7. The term

When will the collaboration commence? Will the project have a definite end date or will it continue until, e.g. funding runs out or research has concluded? Can a party leave the agreement and if so for what reasons and what rights/obligations will it have if it does?

8. General considerations

The parties will also need to ensure that the agreement includes provisions relating to certain general issues, which can nonetheless be extremely important. For example:

• Rights to assign;
• Governing law and jurisdiction;
• Dispute resolution; and
• Changes to the agreement.

9. Heads of terms

If you are going to use heads of terms as a starting point, be clear what their purpose is and what provisions are going to be legally binding. Confidentiality is particularly important.

As you can see, collaboration agreements are one of the most complicated kinds of agreement to negotiate and draft, mainly because of the need to try to predict the future, but also because of the competition law issues that can be involved. It is always preferable to obtain expert legal advice before putting pen to paper as this is likely to save you money in the long run and will help ensure that your legal and commercial interests are best protected.

If you have any questions about collaboration agreements please contact Pippa Farmer of Geldards’ Commercial Services Team on 02920391498 or email: philippa.farmer@geldards.com.

© Geldards LLP 2012

This briefing note is intended solely as an overview of the law. It was last updated on 25th January 2012. No responsibility can be accepted for the completeness or accuracy of this briefing note and professional advice should be taken in relation to any specific problems.