The Leeds inventors group welcomed Kate Reid of Pemberton Reid solicitors who gave a fascinating talk about confidentiality and licensing to a enthusiastic group.
Kate talked about why you should use a confidentiality agreement (non disclosure agreement) when discussing your ideas with 3rd parties and the importance of having an agreement in writing rather than just relying on a verbal agreement. Kate explained that having a written agreement imposes a duty of confidentiality and gives you a right to enforce it – it also acts as a warning. Using a non disclosure agreement can allow you to explore whether or not a potentially patentable idea could be manufactured and even if it might have a market by enabling you to talk to 3rd parties in confidence.
Kate explained that you should decide exactly which elements of what you are discussing are to be kept confidential and for how long (it is best not to limit this) and also what the information can be used for ie. prototyping, experiments and testing or market research, it is also worth stating what the information may not be used for.
Kate then went on to talk about licensing agreements, again her advice was to always enter into a written agreement and she told us that there is no standard form of license - there is no right or wrong and whatever you agree on is okay.
There are however standard elements that you should consider when drawing up a licensing agreement these include:
Exclusivity – is the license non exclusive or exclusive , is it a sole license ?
Territory – which territories should the license cover? does the licensee have experience in all territories , do they have contacts?
Duration / Termination – should the license be for a fixed period which is then reviewed? or will a longer period be required for the launch of a new product?
Just as important when drawing up a licensing agreement you need to consider how to get out of the agreement if the licensee is in breech of the agreement or is not performing – do you add in a notice period?
Royalty payments – are you going to have percentage? A fixed fee? Anything up front or a lump sum? Consider when the payments should be paid – do you want monthly payments? Quarterly? What happens if you don’t get paid?
You should also consider how you will know if the figures the licensee is giving you are accurate – do you reserve the right to look at their accounts? What records do they need to keep and do you reserve the right to inspect all of their records?
It is worth thinking about what the minimum quantities are acceptable and if those minimums aren’t reached what the consequences are.
Infringement / IP maintenance – it is important to decide who will pay for the maintenance of patents , trade marks etc. even if the licensee is paying make sure that they aren’t responsible for renewing. It is also important to decide who is responsible for taking action in the case of infringement of your IP and also for any claims by 3rd parties . You may also want to include the use or limit of use of any trade marks within the license agreement and to sort out who gets the goodwill that is generated by the use of any trade marks.
Termination of the license period – consider making provision for limiting the time that a licensee has to sell stock or make it a condition that they destroy any remaining stock and marketing materials at the end of the license. You could reserve the right to buy back stock.
Kate explained that using a professional to draw up a licensing agreement doesn’t need to be prohibitively expensive – if you have thought about what you want to have included in the agreement the price could be around £400-£700 depending on the complexity of the agreement and could be a very well worthwhile investment.
Two representatives from Airedale Fab Lab which has just opened in Keighley – Raf and Dave came along to tell the group a little bit about the facilities available to inventors at the newest Fablab and invited the group for a tour.
So we are pleased to announce that next months inventors group meeting on the 16th May will be at Fablab in Keighley more details to follow.