(Second Edition)

Kenneth L. Port,  Jay Dratler, Jr.,  Faye M. Hammersley, Esq.,  Terence P. McElwee,
Charles R. McManis, and Barbara A. Wrigley

On-Line Problem Supplement
Copyright © 2005   Carolina Academic Press.   For permission, see CMI.

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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