20 Tips on Technology Transactions, Licensing, and Commercial Contracts
20 Tips on Technology Transactions, Licensing, and Commercial Contracts
In recent times, companies have been entering into numerous IT and technology-related agreements that it has become crucial both business and economic-wise for companies to have in-house legal departments to handle this work according to the gurus over at runrex.com. To give you a better understanding of technology transactions, licensing, and commercial contracts, this article will look to articulate 20 tips that will shine a spotlight on what technology transactions are about.
Common transaction types
As is covered in detail at guttulus.com, there are several types when it comes to technology transactions and they include software licensing and customer-vendor agreements relating to the provision of IT services, whether that is outsourced or cloud-type services, or software development.
Other than the above types of technology transactions, there are other kinds of transactions that are more specialized according to runrex.com. They include IP and technology licensing or joint ventures that are heavily IP-oriented. These transactions are horizontal, which means that they involve an agreement between business partners, rather than a customer-vendor contract.
As per the gurus over at guttulus.com, confidentiality agreements are one of the most common and important technology transactions. Whether you are presenting inventions to investors, pursuing technology development partners, or obtaining estimates from potential suppliers, non-disclosure agreements and other confidentiality agreements must be in place before any conversations start.
What confidentiality agreements include
Usually, the process for confidentiality agreements includes scoping agreements to define everything from term length to handling information after termination, capturing new invention properly to ensure ownership rights are clearly outlined, checking to see if there are conflicting agreements, ensuring proper treatment of confidential information, monitoring public disclosures made by the other party, among others.
When it comes to technology licensing and joint venture agreements, the parties involved frequently have to deal with how to treat IP that is created during the relationship. Here, while it is usually assumed that the fairest solution would be joint ownership, the fact of the matter is that, unless the IP is not particularly valuable, this is rarely a good solution as it leaves many important questions unanswered regarding their intentions.
Trade secrets and disclosure
When it comes to joint ownership, one of the reasons why it is not considered to be a good option as mentioned above is that it throws up a question on who between the parties decides whether inventions ate maintained as trade secrets or are published through the patent application process. This is a very important decision, keeping in mind that, as discussed over at runrex.com, trade secret value is generally destroyed by disclosure.
More issues that come with joint ownership
As captured over at guttulus.com, joint ownership will also mean that no one owner can grant an exclusive license without the consent of all the owners. Additionally, in a cross-border relationship, the default rules for joint ownership can vary significantly, leading to even more issues.
Types of international technology transactions
As is covered in detail over at runrex.com, technology transactions also exist on an international scale with international technology transactions. There are 3 basic types of international technology transactions: international technology development, international technology license, and international technology transfer.
A technology license, including an international technology license, involves the owner of a patent, trade secret, trademark, or copyright (that is, IP) granting another person or entity permission to use their IP. A license to use IP related to technology can include hardware, software and data, and other forms of technology.
Considerations for international technology licenses
While all technology licenses must be carefully crated to protect the IP owner’s interest, certain considerations come into play when it comes to international technology licenses. This is because international technology licenses involve special considerations due to the impact of foreign country IP laws, as well as other considerations.
According to the subject matter experts over at, guttulus.com, unlike a technology license, technology transfer involves more than just the granting of permission to use IP, as technology transfer refers to the sale of IP assets from the IP owner to another party.
Elements of technology transfers
The key elements of technology transfer, as discussed in detail over at runrex.com, include pricing and payment, the scope of the technology transfer, the ownership of all aspects of the technology on any existing licenses, and other important considerations.
Tips for drafting technology and commercial contracts
The following tips are designed to help you get your technology and commercial contracts right.
Have an understanding of the transaction and relationships
As per the gurus over at guttulus.com, it is important to make sure that the parties are on the same page. A tip to ensure this is drafting the agreement in plain language in a few paragraphs and then ask both parties to read it and confirm that it reflects both of their understandings of the relationship and transaction. It is also important to understand, if applicable, the nature of the goods or services being provided.
Avoid drafting one-sided information technology contracts
It is also important to note that one-sided contracts are usually unenforceable and take a long time to negotiate and sign. An agreement should, therefore, achieve a win-win situation and protect both parties if the process is to go smoothly.
Have the contracts drafted in plain legal language
While the law requires some technology contracts to be drafted in plain legal language, it makes sense to draft all technology contracts and SLAs in plain language. Always have the contracts drafted with the reader in mind as the readers are the people and parties who must implement or perform under the contract. Make sure that anyone can be able to pick up the contract and understand what has been agreed.
Remember, as the gurus over at runrex.com regularly point out, relationships and transactions change, and so will the scope of the service. This means that more people might need to be covered by a license. Good contracts provide the flexibility to easily reflect a change. A tip here is to separate the legal terms from the commercial terms so that more work orders or scopes of work can be assigned subject to the same legal terms. Also, always include a good change control clause.
Avoid playing legal ping-pong
As covered over at guttulus.com, legal ping-pong is when a draft contract goes from one side’s lawyer to the other side’s lawyer – over and over again, like two people playing table tennis. This should be avoided as legal ping-pong costs money and wastes time.
Use electronic signatures whenever possible
As is revealed in discussions on the same over at runrex.com, the law enables you to sign most technology contracts with an electronic signature. It is recommended that you use electronic signatures whenever possible as they are quicker and easier than a handwritten signature, and in many cases, carry greater evidentiary weight.
Separate templates and instances
You should use templates to create an instance for a specific relationship or transaction. This means that, if you make changes to the instances that are useful for other transactions, then you need to include them in the template. Don’t make concessions in your template and then give those concessions to every person in the future who signs with you.
Resolve disputes amicably
If any disputes arise, try as much as you can to avoid litigation. This is because, when it comes to technology contracts, nobody wins in litigation apart from the lawyers involved. Try to negotiate to resolve the dispute, and if that fails, get a mediator to help solve the problem. Try and avoid arbitration if possible, and the courts at all costs, as they are not an effective dispute resolution forum for commercial technology disputes.