Stage 4 Comprehend IT negotiations

Head of agreement structure.

Maria Delfina Coronado Lagos

Group number:212032_30

VALUATION AND NEGOTIATION OF TECHNOLOGY

09/11/2022

Head of Agreement Document

It is a document that contains the most important parts of a bussines deal; it is signed by the companies or people involved in the deal before they sign the main written agreement. A head of agreement is also know as a proposed basic of agreement, it is like a summary of the key commercial issues that you wish to take into account at the negotiation table and that you wish to include in the licence agreement. In the head of agreement you may identify the issues that you consider more or less important for the parties. The Heads of Agreement typically are a set of bullet point headings, under which the parties are expected to discuss and complete in their own words (or brief bullet points) the decisions they have reached on each item. Example: Head of agreement document for negotiating a research collaboration, license agreement, license option agreement, patent exploitation agreement, or other.

Costs

Royalties

Royalties are regular payments to the licensor, which reflect the use of the technology by the licensee. As they link use with a monetary amount they can be a good reflection of the value of the technology to the licensee and, accordingly, royalties are the most usual type of payment in license agreements.Royalties have two key components: the royalty base and the royalty rate.The royalty base could be the cost of manufacturing or the profit from selling the licensed products General, The royalty base could be the cost of manufacturing or the profit from selling the licensed products. Example: Royalties on Sales Licensee shall pay to the Licensor or to its assigns, in accordance with the provisions of this present Article, a royalty in the amount of five percent (5%) of the Net Sales of each Product in the Territory as well as of any material value or reduction that Licensee may obtain from the purchasers of the Product in compensation for the Product.

Who will incur the costs of: a) the technology transfer and b) the development work (if any)? Who will pay the patent costs if any new patents are to be filed? for example, joint patent applications. Determine which of the two parties will assume the different costs associated with patents when they are jointly or technology transfer

Why is important the Head of Agreement document in a technology negotiation?

Payment Schedule

Depending on the payments that have been agreed, also agree when the appropriate payments should be made. A licence fee may be paid as: -A single payment made on signing; - A single payment on signing, to be deducted from the first royalties due; -X% on signing, the balance on achieving milestones A, B, C, etc.; and/or -Quarterly, half-yearly or annually amounts (quarterly provides better control). Example: schedule the payment of the license or patent within 10 days after the purchase order

It is of great importance since it allows to stipulate the terms and conditions in which a technological negotiation can be carried out, in addition we will have a wide knowledge regarding the subjects treated (such as: royalties, guarantees, payment schedule, licenses, etc.) which would allow better results.