Chapter 7
Problem 7: Term Interactions
It is important to recognize the interrelationships among terms
in a license agreement. If GNN, for example, accepted Contair's initial
position in negotiating a license requiring (a) an annual minimum royalty
of $25 million against 20% of the licensee's net profits from the licensed
technology, plus a $20 million up-front licensing fee, and (b) early termination
if the GNN fails to make certain sales targets, how would this affect a
clause in which GNN agreed to make "best efforts," or to meet
certain numerical sales and development goals, in exploiting the licensed
technology? As counsel for GNN, draft all three clauses (for payment,
termination, and exploitation) in a manner acceptable to both companies.
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