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Agreements and IP

Basics of contracts

An agreement or a contract is a legally binding agreement between the parties concerned.

It gives each party the right to take the other to court, in the event that the other party does not do what they agreed.

To be legally binding a contract must have:

  • An offer by one party
  • An acceptance by the other party
  • A ‘consideration’ – a benefit that each party gets from the other (if there is no consideration then the agreement needs to be executed as a ‘deed’ which has different arrangements for signing to a simple contract)
  • An intention to have a legally binding relationship

Whilst some agreements can be verbal, to provide certainty over the agreed terms, a written document is recommended.

Normally, when two (or more) parties are reaching an agreement, the contract is drafted by one party and then reviewed by the other. There is often some negotiation between the parties regarding the wording of the terms of the agreement, before they are both happy with it.

At this point, any ‘draft’ or ‘subject to contract’ wording is removed and a hard copy (or enough copies for each party to have an original) is prepared for signature. It is important to note that the ‘agreement date’ is the date that the last signature is gained on the agreement and therefore it is often hand written on the agreement. The date that the agreement comes into effect (often called the ‘effective date’) may be a date either before or after the agreement date, although it can also be the same as the agreement date.

To be legally binding, an agreement must be signed by people who are authorised to sign contracts on behalf of their organisation. The company directors and also public company secretaries are authorised signatories, but a company can also appoint other people as authorised signatories. For agreements with NHS organisations, it is important to ensure that an authorised signatory is identified to sign the agreement. The Trust Chief Executive and the Finance Director will be authorised signatories and other senior positions will have delegated authority as set out in the Trust’s Standing Financial Instructions (SFI). Clinicians are unlikely to have the authority to sign legal agreements.

Types of agreements

There are a number of common agreements that are used for particular IP issues between companies and NHS organisations (see table). It is important to remember that although agreements with a particular name customarily perform a particular function, the name itself is just a label and it is the terms of the agreement that matter. For example, a licence agreement may include terms relating to an associated collaboration; an assignment agreement may include a licence to use some background IP; and many types of agreement also include confidentiality terms.

Agreement type Common abbreviation When used Notes
Confidential disclosure agreement/ Non-disclosure agreement CDA / NDA To ensure that each party keeps the other party’s confidential information (and/or IP) secret It’s important to define the information disclosed and also the purpose
Licence agreement - To give permission for one party (licensee) to use the other party’s (licensor’s) intellectual property (IP) and specify the terms of use

A licence can be:

  • Sole – only the owner and the licensee can use the IP
  • Exclusive – only the licensee can use the IP
  • Non-exclusive – the owner and a number of licensees can use the IP

A licence can be granted for free or for a fee (annual fees and/or royalties)

Assignment agreement - To permanently transfer ownership of IP from one party (assignor) to another (assignee) Depending on the IP rights assigned, it may be necessary to notify others of the assignment (e.g. UK Intellectual Property Office for registered rights such as patents, trade marks etc)
Collaboration agreement - To outline each party’s obligations during a collaboration and what will happen to any IP generated The terms of a collaboration may be combined with the terms of a licence, assignment or material transfer agreement and therefore the agreement may not be called a ‘collaboration agreement’
Material transfer agreement MTA To describe the terms of sharing chemicals, materials or biological samples owned by one party with another, normally for research purposes, and to define which party will own any IP generated during the research This restricts the use of the materials, reduces the owner’s liability and may allow the owner to gain access to the research findings
Memorandum of understanding MOU To describe what two or more parties have agreed Often assumed to be non-legally binding but this may not be the case in some circumstances

Funding contract/Grant agreement

- To outline the terms of the funding and the responsibilities of the parties Likely to cover IP issues such as who owns IP created during the use of the funding, how it should be commercialised and whether any income generated will be shared by the parties

 

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