A Technology Transfer Agreement facilitates the sharing or commercialization of proprietary technology between parties. This playbook provides guidance on ownership rights, confidentiality, and obligations to support the transfer process.
Why This Matters: Inadequate termination rights can lock parties into unviable arrangements or expose them to ongoing obligations after commercial viability ends.
Negotiation strategy
If you're the Licensor:
Ensure the term aligns with strategic goals and includes clear renewal and termination provisions. Negotiate for flexibility to terminate upon breach or significant business changes.
If you're the Licensee:
Advocate for automatic renewal to ensure continuity but agree to reasonable termination rights to address breaches or mutual agreement.
Essential elements
1
Agreement Duration
Defines the contract's time span.
2
Renewal Process
Mechanics for extending the contract.
3
Termination Triggers
Conditions for ending the contract.
Action framework
ACCEPT
Propose edits if the term length or renewal process does not align with strategic objectives.
EDIT
Reject clauses that lack clear termination rights or enforceability.
ADD
Add language to specify jurisdiction-specific termination rights if absent.
PRO TIP
Always ensure termination rights are clearly defined to avoid unintended obligations.
Example clauses
FAVORABLE
Preferred Term and Termination Clause
"The term of this agreement shall be [X years], with renewal subject to mutual agreement and performance review. Either party may terminate this agreement upon [Y days] written notice in the event of breach or significant change in business needs."
NEUTRAL
Fallback Term and Termination Clause
"The agreement shall automatically renew for successive [X year] terms unless either party provides [Y days] written notice of intent not to renew. Termination may occur upon breach or mutual agreement."
UNFAVORABLE
Indefinite Term Without Termination Rights
"The agreement shall continue indefinitely without specific termination rights, subject to mutual agreement."
Fallbacks
High-Risk Projects
In high-risk projects, ensure termination rights are robust to allow exit if risk thresholds are exceeded.
Long-Term Partnerships
For long-term partnerships, include periodic performance reviews to justify renewals and termination options.
Jurisdiction-Specific Requirements
Adjust termination rights to comply with local laws, ensuring they do not conflict with other contract terms.
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