Business Contracts

Business Contracts

Simply put, contracts are oral or written agreements between two or more parties. And they are enormously useful in insuring protection and ownership of intellectual property rights. Contracts can be verbal, but it is very difficult to prove that such agreements contained the appropriate terms. It is much better for the parties to discuss the terms, then negotiate and reduce those terms to a writing which can be signed by both parties. Contracts that are clear, fair and enforceable are more likely to produce beneficial economic results and prevent expensive litigation.

Here are some examples of useful contracts that require careful drafting.

Confidentiality Agreements

Confidentiality agreements (often called “nondisclosure agreements) are very important to the owners of intellectual property rights because they can be drafted to prevent other parties (whether they be manufacturers, consultants, or other inventors) from making, using, disclosing or copying the protected work without the owners permission. But they are also important to the receivers of the protected information (the manufacturers or consultant etc.) because they define what they are prevented from doing of sharing. Manufacturers must be careful, for example, that they don’t sign confidentiality agreements which prevent them from manufacturing or developing similar works that they have developed or acquired independently from the other party to the agreement. So, it goes both ways. All parties need to make sure that the contracts they sign protect their respective interests.

Confidentiality agreements have special meaning for inventors because they affect filing rights. They must protect the novelty of the function and appearance of an invention so that it is not disclosed before a patent application (for example) is filed. Disclose without such protection could substantially affect the ability of the inventor to obtain such rights.

Contracts Relating to Ownership, Sale or Licensing

Contracts are also used extensively to govern the relationships between an author and an employer. For example, whether a work is considered a “work for hire” and therefore owned by the employer rather than the author employee depends on the terms of the contractual relationship between author and employer. Contracts are also used to govern the relationships between owners and manufacturers. For example, responsibility for paying patent prosecution or maintenance fees often depends on the terms of a written contract. Contracts are also used to govern the sale or licensing of the protected work. The terms of these contracts can be intricate and involve many hours of analysis and negotiation. Thus, it is important that the parties adequately understand the legal implications of the terms and that the terms adequately reflect the desires of the parties.

Again, litigation arises, most often, from misunderstanding and poorly drafted contracts. Attorney assistance can be instrumental in making the terms clear, fair, and enforceable.

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