Ip · Lawyer

Who would you use to build a rock solid contract to protect your IP?

Shachindra Agarwal Entrepreneur and Technologist

September 23rd, 2016

We are a Dallas based enterprise solution startup and are under active sales negotiations with a top-ten tech company. We are advised to have a rock solid contract that protects our IP. 

Do you agree? Who would you recommend to build such a contract?

David Fligor Managing Partner - Palo Alto Office at Progress LLP

September 23rd, 2016

You absolutely need a good IP and contracts attorney to help you put together a solid agreement. 

Without a solid agreement drafted by someone who knows IP and how to draft and negotiate contacts, you stand a high likelihood of getting terms that may sound okay, but you will find that you signed up for more work than you expected (e.g., acceptance and delivery terms, warranty provisions), to extend more IP rights than necessary (ownership, exclusive or perpetual licenses) or not even getting paid what you thought based on ambiguous payment terms. A good IP and contracts attorney can also advise on tricky open source licensing issues. Finally, such an attorney can help you get a fair allocation of IP infringement and other risks. Most tech companies don't want to make $1 million and then risk being on the hook for $10 million of their legal fees for something you did not cause. 

Try to find an attorney who had training from a large tech-focused law firm and worked at a small technology company negotiating against large companies. You could compare legal fees and how well you communicate with a few lawyers and someone might be willing to do the project for a fixed fee rather than hourly. If the attorney actually can partner with you to get the deal done with the customer happy with the outcome, even better. Feel free to contact me. If I can't help you, I may be able help you find someone.

Rob G

September 23rd, 2016

David hit it pretty squarely.  I would ad that if you don't have experience managing attorneys then find an advisor who has experience with this who can help you - I would suggest a tech company exec (perhaps retired) who has negotiated contracts with other large tech companies, maybe with this same company.  a contract lawyer's job is to reduce risk.  too many lawyers think this means getting every provision under the sun into the agreement and to make sure they all lean in your favor. That's costly and can piss off the other side to the point of walking.   You have to know what provisions are deal killers and which are good to throw in as 'deal fodder' (those you can give on in order to make the other side feel they've won something).  Knowing the difference between a tough negotiator and an asshole is important.  The other reality is if this is truly a 'top 10' tech company and you are a services startup the other side has little incentive to budge on deal terms unless you have some IP they really need.  Otherwise you are most likely to end up signing their standard terms with perhaps a few minor mods in an addendum somewhere.  If you can find an attorney who has negotiated deals with this same company that could be helpful.  Better yet is an attorney who used to be in-house at this company and is now outside. 

Chris Kwan Advocate, Barrister, Solicitor & Registered Patent Agent & Migration Agent Australia (MARN 1576447)

September 25th, 2016

Actually I am not sure what type of IP you are referring too as each one say Patents or copyrights have their own specificities. In any event, Iike what Rob had say it pays to have a good negotiator. But I read your requirements again, this is for a sales (or rather licensing agreement ?) and in general, the buyer of this nature is only interested in using your application rather than duplicating or creating what you are offering. A sales contract normally have a generic IP ownership clause, ie everything belongs to you period. What you should be concern is liabilities and how fees are structured. As for a solid contract ? I think is a myth otherwise how would litigation guys like me make a living. It all depends on the parties who may bring a suit because they had considered the cost and benefits of suing is more. My advise is know your parties well. Do your research about them and find out who are their current suppliers. Also if they are anywhere in the top ten, it is likely to be in-adverse to litigation should a dispute arise.