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IP&IT Contracts

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Welcome to the IP&IT Contracts section

To defend your idea against infringement you need to choose the most effective protection with the help of an expert.

Avv. Chiara Morbidi

Chiara Morbidi, Esq.

Head of the Legal Department

Below you will find a guide to the main topics to help you shed light on the matter.

  1. PatentAssignment
  2. PatentLicences
  3. TrademarkAssignment
  4. TrademarkLicences
  5. CoexistenceAgreements
  6. FranchiseAgreements
  7. Licences and transfer of know-how
  8. Confidentiality agreements orNon disclosure agreements(NDA)
  9. Publishing Contracts
  10. Agreement for transfer of copyright
  11. Software Licence Agreement
  12. Software Development Agreement
  13. Cloud Service Contract – Software-as-a-Service
  14. APP User Conditions
  15. Contract for the creation of a website

Choosing and writing a good contract that protects rights regarding patents, trademarks, copyright and software/APPs is not a simple matter.

The choice of the type of contract most suited to the needs of an individual company or the creator of a work of art has consequences that can have considerable repercussions for the owner of a trademark, a patent or other industrial property right, or the copyright owner of one or more works.

Choosing one type of contract in preference to another is the result of a careful strategic assessment that responds to the specific needs of each company or market player.

For example, sometimes it is thought that the best solution is to stipulate a contract for the sale of a trademark or patent, whereas it might be more appropriate and economical to stipulate a licence or, in other cases, to proceed with a trade mark coexistence agreement.

In addition to understanding the most suitable type of contract, it is also necessary to understand which aspects can be subject to negotiation and which points are essential and mandatory for the protection of players’ interests, identifying the most suitable clauses for the individual needs of the case.

Once the contractual outline has been chosen, the conditions must be written down and it is important that careful consideration is given to every aspect.

Only with experience can a lawyer prepare a good agreement, as handling of previous cases gives better understanding of the possible weak points and risks to be avoided.

Whilst contract templates of all kinds can be found on the Internet, remember that none of them has been written specifically for you and that each case is different.

Getting the contract wrong can be very costly, much more than professional advice, so think again before trusting to luck.

1

Patent Assignment

A patent can be freely surrendered even before it has been granted. In other words, it can be donated, sold, transferred to companies by means of any contract capable of producing transferring effects.

This is a seemingly simple contract.

In fact, when you buy a patent you should be very careful about what you are buying and a very accurate analysis of the patent must be carried out before entering into any contract of this type.

It is essential to carry out  “due diligence” checks to ascertain that the patent is really valid, that it has not been challenged and that there are no pending lawsuits or contracts already drawn up which limit or bind it.

It might be that a patent is completely valid and effective in Italy but has been revoked and declared invalid in a different country. If such a situation occurs, the Italian patent, which is currently valid, could suffer the same fate and thus prove to be a bad investment.

On the other hand, the seller must also be very careful about how the contract is drawn up so that in the future he is not liable for things that were not said or for past events he might not be aware of.

It is therefore strongly recommended you seek advice from experts who, like ours, work together and can draw on both the experience of a lawyer trained in patents and the expertise of a patent attorney with regard to technical examination.

This type of contract is free-form but must be registered with the competent Administrative Offices so that it has an effect on third parties and this can have consequences on the form of the deed. In Italy, for example, only contracts having the form of a public document or notarised private agreement can be registered.

2

Patent Licences

A very common way of exploiting a patent is to license it.

The licence is a sort of “rental” of the patent with which the inventor grants third parties the right to implement the invention, exclusively or otherwise, in exchange for a fee (royalty) usually expressed as a percentage of the profits made by those who exploit the invention.

When licensing a patent ownership is retained, whereas transfer of the patent corresponds to its actual sale.

When a patent is to be licensed, it is in the interests of the licensor to limit the rights of the licensee to whom he grants the licenses to certain uses, which must be clearly specified in the contract.

The licence may be worldwide or limited to a certain territory, it may be granted for the entire duration of the patent or for a certain length of time.

A licence agreement is not at all straightforward and must be written by an expert in the field.

Think, for example, of what happens if a licensee fails to effectively promote and sell the product.

In our professional experience we have witnessed situations of this kind, when an inventor had granted an exclusive licence for twenty years and then in fact found himself not collecting a penny because the entrepreneur did not invest in marketing the product.

If the contract is poorly written or does not contemplate such a situation, the patentee is likely to see his patent expire without collecting any royalties and even having to make large payments for legal action.

Imagine what would happen if the contract says nothing about checks of turnover. You could find yourself in difficulty when attempting to calculate the royalties you deserve or, worse, you could lose most of your earnings.

The experience of an expert is also important in this case so that the contract guarantees you the most and avoids loss of income.

The advice here, more than ever, is to be wary of the templates you find in circulation because each contract is like a tailored suit that fits perfectly and protects you only when it has been written with your concrete situation in mind.

This type of contract is free-form but must be registered with the competent Administrative Offices so that it has an effect on third parties and this can have consequences on the form of the deed. In Italy, for example, only contracts having the form of a public document or notarised private agreement can be registered.

3

Trademark Assignment

A trademark can be “sold” or surrendered to third parties for a price to be agreed.

The transfer may concern all the products or services for which the trademark has been registered or only a number of them. It may concern every state in which it is registered or only a number of countries.

This is a seemingly simple contract.

In fact, when you buy a trademark you should be very careful about what you are buying and a very accurate analysis of the trademark must be carried out before entering into any contract of this type.

It is essential to carry out “due diligence” checks to ascertain that the trademark is really valid, that it has not been challenged and that there are no pending lawsuits or contracts already drawn up which limit or bind it.

It could indeed happen that the trademark is bound by a coexistence agreement with the owner of a similar brand or that it has been the subject of a lawsuit in which it was recognised as a weak trademark.

On the other hand, the seller must also be very careful about how the contract is drawn up so that in the future he is not liable for things that were not said or for past events he might not be aware of.

Furthermore, when the sale of the trademark is released from the sale of the company or of the branch of the company that produces the goods and services marked by the trademark, it is necessary to preserve the essential characteristics of the brand and maintain the same quality level prior to the sale so as not to mislead consumers and exposing the purchaser to sanctions.

This type of contract is free-form but must be registered with the competent Administrative Offices so that it has an effect on third parties and this can have consequences on the form of the deed. In Italy, for example, only contracts having the form of a public document or notarised private agreement can be registered.

4

Trademark Licences

A trademark can also be exploited by licensing it to third parties.

A license is a sort of “rental” by means of which the owner of the trademark grants to third parties for a certain period the right to use it, exclusively or not, for the sale of their products or services in exchange for a fee (royalty) usually expressed as a percentage of the profits made by those who exploit the trademark.

When licensing a trademark, ownership is retained, whereas transfer of the trademark corresponds to its actual sale.

The trademark licence may concern all or part of the products and services for which the trademark has been registered and may relate to one or more territories in which the trademark is registered.

But we must be very careful.

The licence agreement must include a series of specific and well-defined conditions on how to use the sign, especially when the trademark already has its own history or when it is licensed to more than one entrepreneur.

Products bearing the trademark must in fact guarantee the consumer the same quality and therefore the licensee must fulfil a series of obligations that are imposed on him and is not able to act with total freedom.

This is why a trademark license agreement is even more complex and delicate than a transfer agreement.

In addition to what we have just said, there are other risks to consider.

Think, for example, of what happens if a licensee fails to effectively promote and sell the product.

In our professional experience we have witnessed situations of this kind, when a trademark owner had granted an exclusive licence for twenty years and then in fact found himself not collecting a penny because the entrepreneur did not invest in marketing the product.

If the contract is poorly written or does not contemplate such a situation, the trademark owner risks collecting no royalties and even having to make large payments for legal action.

Imagine what would happen if the contract says nothing about checks of turnover. You could find yourself in difficulty when attempting to calculate the royalties you deserve or, worse, you could lose most of your earnings.

The experience of an expert is also important in this case so that the contract guarantees you the most and avoids loss of income.

The advice here, more than ever, is to be wary of the templates you find in circulation because each contract is like a tailored suit that fits perfectly and protects you only when it has been written with your concrete situation in mind.

This type of contract is free-form but must be registered with the competent Administrative Offices so that it has an effect on third parties and this can have consequences on the form of the deed. In Italy, for example, only contracts having the form of a public document or notarised private agreement can be registered.

5

Coexistence Agreements

Trademark coexistence agreements are contracts that serve to regulate the relationships between the owners of identical or similar trademarks.

These agreements are necessary when there is a conflict between two trademarks and the respective owners intend to find an amicable coexistence solution rather than face a lawsuit.

The owner of a registered trademark can, for example, allow one or more potentially mistakable similar trademarks to exist on the market unless this entails the risk of misleading the public and on condition that the other party respects a series of conditions.

The most frequent case is that in which the owner of a trademark presents an administrative challenge against another person who has filed a similar trademark and the two agree, for example, to use a different graphic or to use the brand for different products in order to avoid confusing the market.

Coexistence agreements must be well calibrated because they actually “undermine” the brand by limiting possible future uses and must take into account the territorial areas concerned.

Our experts have great experience in this type of agreement and are well versed in its pitfalls and advantages.

6

Franchise Agreements

Also defined as an affiliation agreement, the franchise is a contract through which one company (called Franchisor) grants another company (Affiliate) the right to exploit and makes available a set of industrial or intellectual property rights in order to market goods and services.

There are various types of franchising agreements depending on the characteristics of the commercial network to be built.

The law prescribes a series of essential contents that the agreement must have under penalty of nullity as well as a series of operations that must be carried out under penalty of nullity.

Franchising is a good opportunity for growth and profit but the agreement must not be underestimated.

If you are the Franchisor, you must pay attention to the regulatory constraints and establish the agreement well to avoid the loss of your know-how or running into difficulties in collecting the fees due.

If you are an Affiliate, you must beware of agreements that are too restrictive, that hinder investment and only allow for modest profits.

Variants alongside the franchising agreement in business relations include co-branding or co-marketing agreements, which are made when there is no real commercial affiliation but two or more companies start a collaboration relationship for the management of their own marketing initiatives or trademarks.

For this contract, more than ever, it is essential to contact an expert in brands and know-how.

7

Licences and transfer of know-how

Agreements for the license or transfer of know-how are used to license or transfer non-patentable or in any case non-patented technical knowledge, which constitutes the trade secrets of a company.

Trade secrets comprise company information and technical-industrial and commercial experience subject to the legitimate control of the holder; for such information to be secret, it has economic value because it is secret and is subjected to reasonably adequate measures to keep it secret.

Trade secrets, in order to be protected, must therefore:

  • be secret: the information must be difficult to know and not generally known or easily accessible to experts or players in the field;
  • have economic value: the information must have an economic value as it is subject to secrecy constraints so that the company that holds it is in a privileged position compared to competing companies that do not have the same information;
  • be subjected to reasonably adequate measures to keep them secret.

In transfer of know-how agreements, the expert plays an essential role because he will be the person concerned with identifying precisely what constitutes the subject matter before writing the contract.

Therefore it will be necessary first of all to examine the company assets carefully and to distinguish those with the above characteristics and which can therefore qualify as a trade secrets and subject matter of a contract.

Trade secrets are the sum of the entrepreneur’s knowledge and experience, very often over many years. When considering transferring these assets, which are vital for the Company and which bring technological and competitive advantages, it is important to be assisted by an expert in order to avoid the risk that the fruit of labour and sacrifice is incorrectly classified or disclosed.

In contracts of this type, in addition to all the precautions related to assignment or licensing that are similar to those for the transfer or licensing of patents, the importance of guaranteeing the maintenance of secrecy must be taken into account. This is one of the most difficult and delicate aspects and can seriously compromise company knowledge.

You should only rely on experts who have the experience and know how to handle your know-how with care.

8

Confidentiality agreements or Non disclosure agreements (NDA)

Then on disclosure agreementis a very useful type of contract to use when confidential information needs to be disclosed to someone.

It is used, for example, in the phase prior to the stipulation of a patent licence agreement or in any situation in which a company or a private individual has to “show their hand” and present their product, their drawings, an idea not yet fully realised or undisclosed work.

To avoid the risk that the other party, to whom the fruit of your work must necessarily be communicated, appropriates your idea, it is opportune to make use of this tool, sometimes even providing for heavy penalties in the event of disclosure of information covered by secrecy.

Sometimes the obligation of confidentiality must be inserted as a clause within another contract, for example in the case of a software development contract or the transfer of copyright, at other times it constitutes a real contract on its own.

NDAs have become increasingly common and easier to get other parties to sign before embarking on negotiations.

Despite somewhat standardised content, it is always better to be wary of the templates you find in circulation because each contract is like a tailored suit that fits perfectly and protects you only when it has been written with your concrete situation in mind.

9

Publishing Contracts

A publishing contract is a contract between author and publisher that serves to regulate the rights and obligations relating to the publication of works in print.

This contract must necessarily be drawn up in written form and according to precise rules established by the law on copyright, which indicates precise obligations for the publisher and rights for the author (in the case, for example of non-publication) that can sometimes be adapted depending on the situation.

There are two types of publishing contract. Depending on whether the number of publications of the work has already been agreed or not between the parties, there are completely different contracts, “forward” and “per publication”, with partially different duration and discipline.

Before entrusting the publication to a publishing house, or to proceed with “self-publishing” through portals like Amazon, it is very important to evaluate and regulate in an appropriate way and according to the author’s needs, the types of rights he intends to assign and those he wants to keep for himself.

It often happens that an author, in order to close the deal, surrenders all rights in an indistinct manner and in every part of the world and remains tied to the publishing house for a long period of time, without the possibility of further developments. If you opt for a total transfer of rights in favour of a publishing house, the latter will have the last word on changes to the work, the type of distribution, translation rights and all variants, except for the legal limits and the moral right of the author.

When publishing an e-book, a specific and atypical contract is required that follows the rules and regulations of the publishing contract but needs some adaptations due to the “non-traditional” format of the work.

As with any publishing contract, it is essential for the parties to expressly provide for and regulate all aspects relating to the publication.

10

Agreement for transfer of copyright

These are contracts by means of which the author of a work transfers the rights of exploitation/economic use of his work to another party.

Any author can choose which rights to assign and for how long.

Before being able to stipulate this contract, it is necessary to analyse and verify whether the party who intends to transfer the rights to the work is actually the actual author or is endowed with the legitimacy to dispose of and transfer the work; this is not always easy to identify, especially in the case of collective works (such as musical or cinematographic works), which are usually the result of the work of numerous authors.

The circulation of works of art requires particular attention. These types of contracts may be subject to rules regarding sale and copyright, and also those concerning the protection of cultural assets, according to category of work.

This is an area where the intervention of an experienced lawyer is required.

11

Software Licence Agreement

The licence agreement does not cover the sale of the software, which one remains the property of the owner, but its use by a third party.

Licences present different problems depending on whether they are licences on standard programs or licenses on customised programs. Standard licences are well known and can be of different types.

One of the most widespread user licences for standard programs, due to the need to speed up the marketing of the software and the impossibility of using the written form for related transactions is the Shrink wrap contract/license agreement.

In this case, the software is enclosed by the licensor/producer in a cover showing the general conditions of the contract outside and the contract is perfected without any signature when the user opens the cover.

From an economic point of view, the least expensive license is the OEM (Original Equipment Manufacturer) licence, which is automatically concluded by the purchase of hardware on which the program has been pre-installed. The main feature of this license is that it is directly connected to the computer purchased. Some software producers have OEM agreements with PC manufacturers authorising operating systems to be pre-installed on computer hard disks but not distribution separately from the hardware.

It is always a good idea to read the licence before buying a product, even if it is actually imposed by the seller, and decide whether to accept it or not use that software.

Even if these licences are imposed, it is always a good idea to know what is in them before buying a product.

Another form of software licence is the open source licence agreement which gives the licensee the right to access the software source code, to modify it to create additional programs and to make copies of both the original software and the program reworked by the licensee himself and also to distribute them for a fee.

However, those who produce software often have the need to draw up “ad hoc” licenses as well as to sign specific contracts with their developers in order to be sure that they have all the rights to the program and can distribute them safely. These types of agreement must be researched and drafted on a case by case basis.

There can be multiple variables in a licence agreement. Licence agreements can be drawn up which grant the right to use a program for a fixed or indefinite time upon payment of an annual or one-off fee and demo agreements, by which the software is granted to the licensee for a certain period of time during which he can evaluate whether to buy it or not and at the end of which, if he wants to continue using it he can do so by paying the full price.

Customised licence agreements are not straightforward and care and attention must also be paid to them when analysing the needs and expectations of the licensor.

Avv. Chiara Morbidi

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12

Software Development Agreement

A software development agreement is used when a company or a person appoints one or more developers to create a computer program that performs certain functions.

In the development agreement the client (or whoever appoints the developer) knows what he wants but does not have the technical ability to achieve it.

The contribution of the developer is therefore very important, as he will have to suggest the best technical solutions to achieve the desired result.

The type of contract depends on whether the developer is a company or a freelancer.

The contract liabilities also vary, according to the provisions of the Italian Civil Code, but nothing changes as regards the transfer of software rights. These rights should pass to the client but since copyright is very varied it is strongly advisable not only to prepare a written contract but also to try to foresee the subject matter of the contract right away and then the faculties and rights of the parties involved.

The first thing that needs to be highlighted in a contract is the type of software that needs to be developed.

However banal this aspect may seem, it is of fundamental importance to avoid future disputes and to be able to determine what the developer should do because it is included in the contract and what represents an unexpected change or addition. From a practical point of view, software development agreement are always accompanied by one or more attachments that describe as precisely as possible what will be developed and which functions will be included in the program.

The most important elements to be taken into account when drafting a software development agreement include the indication of the type of machine on which the program must run, testing methods, express identification of who the owner of the software will be, requirement that the developer declares that the program is original and the result of his work and provision for technical support and intervention for any bugs.

As with all contracts, but especially so in this case, the use of standard contracts is very rare because each software development agreement is custom-made according to specific needs. This type of agreement must be researched and drafted on a case-by-case basis, depending on the type of services provided, company structure etc.

The software development agreement is often accompanied by a software maintenance agreement that guarantees constant maintenance by the person who created the program or by another technician, in order to guarantee constant efficiency throughout the operational cycle.

13

Cloud Service Contract – Software-as-a-Service

Software-As-A-Service (o SaaS) means a particular use of the Software’s functions by outsourcing the processes of maintaining and managing corporate software.

The “Software-As-A-Service” contract model allows the user to acquire the supply of software applications without the need to purchase the license or bear the costs of installing servers because they rely on those of the service provider.

The remote use of a Software Service, which remains within the infrastructure of the provider, and to which the customer accesses via the Internet, avoids a series of issues relating to management charges, licence purchase, specialist management and maintenance personnel and hardware. The flexibility and lower cost of access to such services can be very advantageous for a company.

An alternative to the Saas is the so-called  “On Premises” model, which provides for the internal management of software resources, which remain under the strict control of the company, and has the same characteristics as a real licence.

A certainly critical point of these contracts concerns the protection of the intellectual property of the contents placed on the server of the service provider and the distribution of the risk in case of loss of such data, which must be punctually regulated.

This model also places the burden on both the customer and the Supplier for proven IT security standards, as well as the fulfilment of compliance obligations regarding the protection of personal data, which must be carefully evaluated by a legal expert along with the support of a technician.

These are obviously aspects that are not easy to solve and which always end up having a significant impact on one party or the other; a contract that constitutes a good compromise for both parties is therefore necessary.

Another issue to be settled prior to the provision of the Service is certainly that relating to the guarantees in the event of malfunctioning (bugs) in the service and the support of the Supplier for updates.

As with all contracts, but especially so in this case, the use of standard contracts is very rare because each contract for the provision of Cloud services is a kind of custom-made suit that must be tailored to the specific needs and characteristics of the company and the services provided.

This is an area where the intervention of an experienced lawyer is required.

14

APP User Conditions

When creating a web or mobile application, it is essential to provide contractual conditions and clear terms aimed at protecting the creator/developer/owner of the APP in order to specify as clearly as possible the services and guarantees given to users and the hypotheses of exclusion of liability in the event of, for example, malfunction.

If you are about to launch an APP, you’ll need to agree on the content and regulation of the APP and to provide all tools necessary for the application of legislation on consumer and privacy protection and all the obligations that Italian and especially European legislation requires of web service providers.

15

Contract for the creation of a website

The contract for the creation of a website governs the relationship between a Purchaser and a Supplier, often a Graphic Designer, who undertakes, for consideration, to design, build and put into production the website according to the schedule indicated and agreed with the Purchaser.

In this contract it is essential to regulate the transfer of rights to the website as it may be in the Purchaser’s interests to reserve the right to modify the website, especially after termination of relations with the Supplier.

A critical point of these contracts is the identification what is included and what is not included in the agreed price. To this end, it is a good idea to attach schedules that make the work that needs to be done clearer and so reduces the risk of disputes between the parties.

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