• Term and termination rights – The term of the licence is key and any exclusive licence will need to have a term that complies with competition law rules. The parent company may seek provisions in the licence agreement that require Newco to introduce its first product to market within an agreed timescale (or else risk termination of the licence). Care should be taken with the wording around this, especially having regard to the resources available to Newco.
• IPR infringement proceedings – Newco will want to ensure that it has the right to take action against any third party that is infringing the IPR.
• Undertakings – Newco needs to obtain assurances from the parent company that it will do all that is required to maintain the IPR in force including paying all renewal fees on time. If the IPR is only at the application stage, the parties will need to determine who will be responsible for the costs of pursuing the application through to grant.
• IPR trigger event - Newco should try to build an IPR trigger event into the licence agreement so that if Newco achieves certain milestones (i.e. achieving a set level of sales or payment of royalties), then the IPR will be assigned to Newco.

The assignation agreement
If Newco is fortunate enough to have negotiated a deal which involves the transfer of IPR to Newco, the terms of the assignation agreement must still be carefully considered. Key terms include:

• Warranties - on the technology/IPR, ownership and costs;
• Undertakings - to help secure assistance to further protect and exploit the IPR; and
• Waivers of moral rights – which is relevant for technology that is the subject of copyright.

Additional contracts
There may be other contracts that Newco requires depending on the relevant deal and the key thing is to reflect on what useful things could help Newco in the short and long term. For example Newco may need to enter into the following additional contracts:

• Secondment Agreement – the founders of Newco may wish to remain employees of the parent company (as is often the case with University employees) while offering their services to Newco. In this scenario, the parent company pays the founders’ salaries and Newco reimburses the parent company. The IPR provision in these agreements is often critical.
• Consultancy Agreement – if a founder does not intend to work full-time for Newco, a consultancy contract may be used between the founder and Newco. In this case, care needs to be taken that any IPR created by the founder, vests in Newco.
• Facilities Agreement - Newco may wish to enter an agreement with the parent company to enable Newco to have access to and use of the parent company’s facilities and/or equipment. This can often be key in the early life of a spin-out.
• Option for related technology - Newco may wish to obtain a first option to purchase or licence any related technology from the parent company.

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