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Product licensing agreements, whether or not the product is software program, {hardware}, or easy client items, focus on two main authorized areas: contract law and trademark law. The contract a part of the settlement is pretty apparent whereas trademark is an added necessity on this fashionable age (the place typically as much as 90% of a product’s worth consists of the title or brand on its packaging).
The distributor license – a typical product licensing settlement – is a sophisticated settlement whose drafters should take further care to delineate every occasion’s rights and tasks else pricey litigation is the surefire end-result.
Here is what a typical distributor settlement ought to have:
1) The events (clearly).
2) The Companies: This can be a detailed description of every occasion’s accountability to the opposite. For instance: Occasion A agrees to distribute software program in New York for occasion A. In return, Occasion B agrees to not license some other events to distribute the software program in New York. Maybe occasion B may also be chargeable for updating and offering buyer warranties for the software program? That is in the end as much as the events…
3) The Cost: Who pays whom? At what intervals? What are the penalties for late funds? Who’s chargeable for coping with the end-client, gathering on invoices, and so on…?
4) Extra warranties: That is the place the events make further guarantees to at least one one other. That is additionally the place a superb legal professional will anticipate and supply for as many contingencies as potential: ought to an unanticipated contingency happen, pricey litigation turns into inevitable (e.g., the distributor’s state passes a brand new tax on the kind of product distributor sells and the settlement fails to supply which occasion bears the burden of this new tax). Greatest Recommendation: Don’t depend on Googled kinds, particularly for giant worth agreements; rent a lawyer who is aware of your trade and, due to this fact, is aware of what can go fallacious.
5) Proprietary Rights: That is the trademark law part. The settlement ought to clearly state which mental property belongs to which occasion. After a number of years of working collectively and utilizing each other’s logos in your merchandise, the traces between who owns what can get blurred…
6) Limitation on Legal responsibility: That is normally commonplace language the place every occasion agrees to not maintain the opposite liable for traditional failures beneath the settlement (you possibly can’t disclaim non-standard failures, like setting fireplace to the warehouse).
7) Time period (time): That is self-evident.
8) Termination: That is additionally crucial and requires sound authorized counsel. How a relationship terminates and what persevering with rights and tasks the events have are simply as essential and litigation-prone as how the settlement begins.
9) Arbitration and Selection of law: These are non-compulsory however extremely really useful. A powerful arbitration clause will be certain that any disagreements go to arbitration. Whereas arbitration can get pricey, such prices don’t come close to the years-long engagement of movement observe, discovery and appeals you see in conventional litigation.
In sum, the primary objective of a well-drafted settlement is to supply for as many contingencies as potential to be able to keep away from future disputes and positively to keep away from pricey litigation over such disputes.
