License agreements made easy

By Michelle Zelsman, InfoWorld |  Development

TECHNOLOGY LICENSE AGREEMENTS are the legal documents that convey intellectual property rights between the organization that developed the technology and the organization that wants to apply the technology. These legal agreements "have become much more complex than they were six or seven years ago," says Becky Burr, an attorney specializing in e-commerce law with the Washington law firm of Wilmer, Cutler, and Pickering. Understanding the components and intentions of these documents before you take or release ownership is critical. Organizations that fail to take the time to evaluate and understand the agreement limitations or to set up the ground rules before taking ownership of the technology might find themselves in court.

1. Know your technology

Whether licensing or purchasing a system or application, you must gain a full understanding of the technology's functionality before you install it, Burr says. She believes that this is the most important component of the license or purchase agreement. "You want a clear understanding of what it is that is being licensed and what it is being licensed to do, [in case] there's a [product] development after the license is signed," Burr says.

Burr explains that even after multiple in-depth demonstrations of a technology, often the buyer is unable to understand all functions of the application or software until after implementation. To complicate matters, developers or resellers are often trying to close a sale at the same time the developer's engineers are working on the next version. According to Burr, it is important to understand how that new version will affect the current functions of the technology. Licensees must understand whether they are entitled to the rights for that new version.

Ensure the successful litigation of contracts

To sort out any contract or license in court, craft the appropriate agreement.

* Do not finalize the deal with a written agreement; rather, rely on e-mail and telephone conversations to spell out terms of the deal.

* Reduce the deal to a written document, using the contract signed in a previous agreement as a guide. If the contract worked for another deal, it will fit other situations.

* For technology licenses, technology sales contracts, or SLAs (service-level agreements), use tech jargon. Make sure that no one outside IT understands what's been agreed to between the parties. The business development manager or CFO does not need to understand the contract.

* Do not address foreseeable problems and their resolutions in the contract; rather, leave negotiations on a positive note for both parties.

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