Cooperation agreements - a checklist

 

In the event of any inconsistency between the Danish and English language versions of the document, the Danish version prevails

 

In connection with negotiations for and drawing up/approving cooperation agreements with external partners, the External Cooperation Committee at the University of Aarhus recommends that the following checklist and comments warning against potential pitfalls are used.

Please note that the points listed in the checklist will not necessarily all be included in any given cooperation agreement - this depends on the specific partner and agreement situation in question.

In addition, please note that cooperation agreements must be drawn up in such a way that they are suitable for publication. Any material classified as confidential (cf. section 8 item 2 below) must be kept separate from the agreement, and must be described in a separate appendix.

1. Parties to the agreement

Agreements should always start by describing the parties involved. It is important that all relevant information about the University and the partner concerned is included:

  1. Name. With regard to the University this means the institute and department, laboratory etc. concerned; and with regard to the partner it means the full, official name and legal status of the company (limited company, cooperative partnership etc.) The official registration number of the company (if there is one) in the Danish Commerce and Companies Agency must also be stated.
  2. Full address of all parties.
  3. Finally, it may be relevant in this section of the agreement to state any abbreviations of names used in the rest of the agreement.

2. Basis of the agreement

The basis and purpose of the partnership should then be defined.

  1. There is often only a single paragraph describing (a) why the agreement is necessary, and (b) the qualifications of the University and company with regard to fulfilling the agreement.
  2. This description can be divided into two paragraphs: one describing the background to the agreement, and one describing the purpose of the agreement.

3. Commencement of the agreement

There should be a clause stating when the agreement comes into force. This may be a date that has been agreed in advance, or the moment the agreement is signed by both parties or by one party.

4. Definitions in the agreement

To prevent any subsequent doubts concerning interpretation, it is a good idea to describe the subject of the agreement and define what the concepts used in the agreement mean. The scope of the agreement determines how many concepts need to be defined. Definitions of the following concepts are generally necessary:

  1. The research project. We recommend that the research project is defined in the agreement, perhaps with references to patent applications that have already been submitted or existing patents. The research project can be described in a separate appendix if necessary.
  2. The timetable for the partnership. This timetable must describe the duration of the project and/or agreement.
  3. The knowledge contributed by each party to the partnership must be defined. Some agreements refer to this as "background knowledge".
  4. "Results". In some agreements the results achieved during a partnership are referred to as "foreground knowledge". No matter what term is used to refer to the results, agreements should define how the concept is interpreted. Agreements should describe what the concept covers - stating, for instance, whether inventions, improvements, ideas, know-how and materials are all covered by the term "results".
  5. Intangible rights. The meaning of this term must also be defined.

5. Performance of the partnership

  1. The University's commitments and those of the company must be described: "& will perform the duties specified in the research project".
  2. It must be underlined that the University does not guarantee that specified research results/objectives will be achieved, and that the company may not make claims against the University if specific results are not achieved during the project.

5.1 Specific researchers/researcher groups

  1. One of the conditions that may have been agreed in advance is that specific researchers/researcher groups must be involved in the partnership - either directly or as "supervising scientists". In such cases this must be stated in the agreement.
  2. If additional researchers/technicians need to be appointed, a timetable for such appointments should be stated.
  3. The University must ensure that the persons concerned are able and willing to take part, and that they will not be retiring, taking leave etc. in the near future.
  4. The University should be given the opportunity to nominate/appoint other researchers if people leave the project, without this being regarded as a breach of the agreement.

5.2 Premises, equipment etc.

If the University is required to make premises, equipment etc. available for the project, the scope of this must be laid down in the agreement:

  1. Premises. The premises made available must be defined clearly, including any demands made regarding conversion of and payment for premises. If the company's employees are to be based at the University, the scope of this must be defined. In such circumstances, there should also be a clause stating that the company's employees must regard anything they learn during the time they are based at the University as confidential.
  2. Equipment. The equipment covered by the agreement must also be defined clearly, and there must be a statement of who will defray the cost of any special equipment and who will pay for repairs and replacement. If equipment has been borrowed, there must be a clause regarding insurance, transfer of risk etc.
  3. Payment of travelling expenses, board and lodging for employees. Agreements must state how such costs will be divided between the University and the company.

5.3 Steering groups for projects

Research partnerships sometimes need to be managed by a steering group including members from both parties. The steering group monitors the project, provides regular reports, and comments on the current status of the project. If a steering group for a project is needed, this section of the agreement should also contain clauses on the following points:

  1. When should the steering group be set up - on signing the agreement, or later?
  2. What should the composition of the steering group be, and what happens when people leave/join the group?
  3. What competencies and responsibilities does the steering group have?
  4. How will disagreements be resolved? Will decisions be passed by unanimity or by a majority of votes? The consequences of disagreements should also be described - will disagreements result in the termination of the agreement, repayments etc.

5.4 Reporting

There should be a clause stating how reports should be submitted by researchers or the steering group, including:

  1. The form of reports: oral and/or written, in which language, by telefax, email, letter to contact persons, any requirements regarding documentation and processing.
  2. Where any meetings should be held - number of meetings, and defraying costs.
  3. How frequently should reports be submitted - to meet deadlines agreed in advance, and/or on termination?

5.5 Handling materials

In connection with research projects, the University and the company will often be given access to materials and samples by the other party. Consequently, there should be clauses about:

  1. What such materials should be used for.
  2. Security requirements, responsibility and returning materials.

6. Payment

This clause should contain detailed information about:

  1. Method of payment. In other words: should payment be in cash, what currency should be used, and does payment include or exclude taxes and duties?
  2. Place and time of payment. Where should payment be made, and should payment be made in advance or on demand, and in what kind of instalments?
  3. Adjusting payments. Can payments be adjusted, e.g. due to negotiated salary increases, childbirth and any other cost increases?

7. Allocation of rights

Pursuant to the Danish Act on research patents (Act no. 347 of 2 June 1999 on inventions at public research institutions), the University is generally entitled to demand a share of any commercial utilisation rights if the research performed by its employees leads to inventions that can be patented or protected as utility models.

Consequently, the University cannot normally waive all rights to the commercial utilisation of research results which the Danish state has helped to fund. However, following specific assessment (when a company's joint funding of a research project renders this reasonable) the University may sign a prior agreement with companies on behalf of itself and its employees entirely or partially waiving its rights to any inventions arising from the project, cf. section 9 of the Danish Act on research patents.

Any waiving of rights to patents or other forms of commercial utilisation of research results produced by the University's researchers (or to which they have contributed) must not prevent researchers during or after projects from the ongoing use in research of the research results they have produced or contributed to.

7.1 Partnerships involving no transfer of rights

If the University is not to transfer rights in connection with the project, this must be stated clearly in the agreement. The agreement should state that the results derived from the project belong to the party that has achieved or generated them.

7.2 Partnerships involving the complete or partial transfer of rights

If the University is to transfer rights in connection with the project, the agreement must state who owns existing results, who owns results derived from the project, and which rights are to be transferred. There should be clauses regarding:

  1. Background knowledge, i.e. a description of what each party contributes and makes available to the partnership, on which new results are based.
  2. How rights are to be allocated to new results arising entirely or partially from data that belongs to one of the parties.
  3. How rights are to be allocated to new results arising from the partnership.
  4. The commitment of the parties to provide all information and sign all documents in connection with the transfer of new results.
  5. The commitment of the parties to apply for patents and maintain and protect existing patents and other intangible rights.
  6. The commitment of the parties to utilise the rights acquired.
  7. The commitment to offer acquired rights to the other party/other parties if one party does not wish to retain these rights, and rules regarding additional transfers to third parties, if relevant.
  8. Agreements must ensure that the University has the right to continue to use the research results produced entirely or partially by the University's employees in its research, both during and after projects.

7.3 Using results for research purposes

It is often agreed (cf. point 7.2.8 above) that one party may utilise the other party's results for research purposes. In this connection, agreements should state that this option is:

  1. Restricted by a confidentiality clause in relation to third parties.
  2. Non-exclusive.
  3. Without the option of sub-licensing or other forms of transfer.
  4. Free of royalties.

7.4 Licence agreements

If a right is owned entirely or partially by the University, separate licence agreements can be entered into, or the terms of the licence can be included in the cooperation agreement. If the licence terms are included in the cooperation agreement, decisions should be taken about the following issues:

  1. The object of the licence must be defined, e.g. using a patent application number.
  2. The geographical area of the licence, and whether the licence is to be exclusive or non-exclusive.
  3. Royalty payments, one-off payments, regular payments, minimum payments, place/time/method of payment, sub-licensing, any deductions, net/gross, control measures.
  4. Are there any sub-licensing rights?
  5. The company's commitment to make results ready for the market/saleable, including any support by the University, scope, separate payments and milestones.
  6. The company's commitment to maintain/protect patents, including allocation of costs.
  7. The company's commitment to utilise patents.

7.5 Declarations of intent to enter into licence agreements

If a right is owned entirely or partially by the University and neither of the parties wishes at present to enter into specific licence agreements, a declaration of intent to do so may be included in the cooperation agreement. Declarations of intent should contain the following points regarding any licence which the University may be offering:

  1. The geographical area of the licence, and whether the licence is to be exclusive or non-exclusive.
  2. Are there any sub-licensing rights?
  3. Royalty payments in according with market terms.
  4. The company's commitment to make results ready for the market/saleable, plus milestones.

7.6 Allocation of patent costs

  1. If the rights to results do not belong to one party alone, it should be ensured that the patent costs are allocated as follows:
  2. Each party defrays the costs of protection, maintenance etc. of their own results.
  3. The costs of any joint results are allocated in proportion to each party's share of ownership.

8. Confidentiality clause

It must be possible to use the information, knowledge and results developed by University employees in connection with partnership projects in the University's ongoing research, teaching and other research information activities, and the entitlement to do so must be respected and acknowledged expressly in the cooperation agreement by the other party. Confidentiality that is limited in time can only be accepted if the company has the right of inspection prior to publication, or if confidentiality is necessary owing to possible patenting or protection of use, cf. section 9 below.

There may be a legitimate need to protect a company's business secrets, technical drawings, descriptions, formulations, models etc. which the company has made available to the University's employees subject to confidentiality as a feature of the partnership.

The extent of any confidentiality must be specified in advance in the cooperation agreement. Confidentiality normally only comprises material that the parties have agreed to classify as confidential in connection with the specific transfer of material in question.

The right to continue to utilise the results and knowledge generated by the University's employees (alone or in partnership with others) in research must not be affected by any duty of secrecy or confidentiality.

Confidentiality clauses should contain the following points:

  1. Specification of what is to be kept secret/confidential.
  2. Specification of what is not to be kept secret/confidential.
  3. How to treat confidential information/material.
  4. Any demands regarding special distinguishing marks on confidential material (e.g. stamps).
  5. When is publication permitted? Only after a specified period, only after permission has been granted by the other party, or after the submission of abstracts etc? And how long should the period of assessment and delay be, cf. section 9 below.

9. Publication

The fundamental publication rights of researchers must be respected and acknowledged expressly by the other party in the cooperation agreement. The term "publication rights" is understood to mean the right of researchers to publish their research results in scientific publications and magazines in accordance with the traditions of the research area in question.

However, acknowledgement of the free publication rights of researchers may in certain circumstances be combined with terms stating:

  1. That draft manuscripts must be sent to the partner for inspection for a maximum of 60 days before external steps are taken with a view to publication (e.g. submission to magazines or publishing companies).
  2. That the partner is entitled to propose changes in the text, and that both partners will seek to reach agreement regarding the wording of the text - although the researcher alone may decide the content and wording of the text apart from anything required to protect confidential information.
  3. That when patent applications are drawn up and submitted or applications for utility model registration are made, the partner may demand the postponement of all forms of publication, including printing, for a suitable period which may not, however, exceed six months from the date on which the partner received the draft manuscript for inspection.

10. Transfer of the agreement to third parties

A decision should also be taken as to whether the company is entitled to transfer the agreement entirely or partially to third parties. If the company is given this right, it must be ensured that:

  1. Any such transfer shall require the written permission of the University.
  2. The person(s) to whom the agreement may be transferred must be defined, including a decision as to whether company mergers are regarded as transfers and whether the company is entitled to transfer the agreement to subsidiaries.

11. Appendices to the agreement

There may a clause to the effect that the agreement constitutes the entire basis of the agreement, and that any appendices to the agreement are subject to the written consent of both the University and the company.

12. Force majeure

A standard force majeure clause should be inserted, and could perhaps be extended to cover the absence of key personnel.

13. Transmission of announcements

It may be practical to insert a clause to the effect that any announcements regarding the partnership should be sent not to the University or the official address of the company, but to a contact person. In such circumstances, the legal status of such announcements must also be stated.

14. Duration and termination of the agreement

Naturally, the duration and termination of agreements need to be defined. A clause on this issue should contain the following:

  1. Definition of the period of the agreement.
  2. Option of both parties to terminate the agreement with a certain period of notice.
  3. Statement of and possible repayment of services rendered, including research material.
  4. Reporting on conclusion of the agreement.

15. Breach of agreement

The agreement should state the circumstances entitling the other party to terminate the agreement without notice. Other consequences arising from breach of the agreement should also be laid down.

16. Renegotiation

It may be a good idea to have the option of renegotiating the agreement. Based on specific assessment of the agreement, the terms on which this may be done should be laid down.

17. Applicable law and venues

These issues should always be mentioned in the agreement. The University wishes the following points to be included under this clause:

  1. Disputes must be resolved amicably if possible.
  2. Danish law applies.
  3. Disputes must be judged by Danish courts or arbitration tribunals.