madhavan srivatsan, partner desai diwanji, gurgaon · intellectual property ... desai &...
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Ancillary Agreements in a Joint Venture Collaboration
Technology Transfer Agreement;Intellectual Property Rights Agreements;Distribution Agreements;Employment Agreements;Non‐Compete Agreements;Options Agreements;
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Requirements of Ancillary Agreements in a JV Agreement
Strategic Alliance;The JV Agreement and the SHA have key commercials on operations of the Company;Ancillary Agreements may not be co‐terminus with the JV Agreements and the SHA;Confidentiality;Different Parties;Tax and Stamp Duty Implications;
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Structure of Ancillary Agreements
ABC Ltd. and XYZ Ltd. are two separate entities and have joined hands to form a “new” joint venture company “MNC Ltd”.
One of the JV Partners/Shareholder, i.e. ABC Ltd. may have certain expertise in any of the ancillary fields and thus, MNC Ltd. and ABC Ltd, may execute an Ancillary Agreement. (For example, ABC Ltd. may license or assign its IP to MNC Ltd. or MNC Ltd. may appoint ABC Ltd. as its distributor based upon the commercial understanding of the parties.)
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Structure of Ancillary Agreements
ABC Ltd. has invested directly in MNC Ltd. and there is no third entity. However, ABC Ltd. and MNC Ltd. can still have a SHA/JV Agreement.
On account of investment by ABC Ltd. in MNC Ltd, MNC Ltd. may appoint ABC Ltd as its distributor or ABC Ltd. being a shareholder in MNC Ltd. may assign/license it’s IP in favour of MNC Ltd as ABC Ltd. would be able to derive the value of its holdings by providing IP in favour of MNC Ltd.
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Structure of Ancillary Agreements
ABC Ltd. and XYZ Ltd., two separate entities may join hands and form a joint venture without forming a joint venture company and holding any equity in each other.
In such arrangement, either of the parties may provide services to the other party based upon commercial understanding and purpose of the joint venture arrangement.
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Technology Transfer Agreement
What is a Technology Transfer Agreement?In simple words, under a Technology Transfer Agreement, there is a transfer of know‐how, skills, manufacturing process, expertise in certain areas and facilities from one entity to another entity for certain consideration for the purpose of upgrading and developing the existing technology or for creation of a new technology.
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Technology Transfer Agreement
Manner of Transfer of Technology
From a JV Partner/Shareholder to another JV Partner/Shareholder;From a JV Partner/Shareholder to a SPV in which the Transferor is holding equity;From a JV Partner/Shareholder to a JV Company/Parent Company;
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Technology Transfer AgreementKey Provisions Key Provisions
Identity of the Technology to be transferred;
Clear differentiation between the “new product” and the “existing product”;
Protection of the “Trade Mark”/”Brand Name” of the Transferor;
Exclusivity and Non Compete;
Territory;
Transferability/Assignment
Consideration;
Ancillary Issues;
Termination;
Confidentiality;
Warranties and Indemnities;
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Intellectual Property Rights Agreements
Kinds of IPR Agreements
Trademark Agreement;Brand Licensing Agreement;Copyright Agreement;Name Licensing Agreement;Domain Name Agreement;
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Intellectual Property Rights Agreements
Manner of Transfer of Intellectual Property Rights
Assignment Agreement
License Agreement
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Intellectual Property Rights AgreementsKey Provisions Key Provisions
Clarity on the IP to be assigned/licensed;
Previous Owners/Licensors as confirming parties;
Consideration;
Absolute Assignment and Relinquishment;
Territory and Restricted Use;
Protection of Transferor/Licensor’s IP;
Non‐Compete;
Exclusivity;Ancillary Services;
Termination;
Confidentiality;
Warranties and Indemnities;
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Distribution Agreements
What are Distribution Agreements?
As the name indicates, “Distribution Agreements” are agreements between an “Owner” and “Distributor” wherein the Distributor undertakes the responsibility of distributing/selling the goods for and on behalf of the Owner.
In a typical Distributor Agreement, the title and the right to ownership remain with the Owner and do not pass in the hands of the Distributor.
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Distribution Agreements
Relevance of Distribution Agreements in a JV/shareholders Agreement
Requirement of stand alone distribution chain;Expertise of a particular JV Partner/Shareholder;Capitalizing the income from distribution activity amongst the JV Partners/Shareholders by way of a back to back arrangement;
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Structure of Distribution Agreement in a Joint Venture
ABC Ltd. and XYZ Ltd. have formed a joint venture company “MNC Ltd.”.
ABC Ltd. has expertise in distribution activities and is thus acting as distributor for MNC Ltd.
The income earned by ABC Ltd. by acting as a distributor is partly shared with its JV partner XYZ Ltd even though there may be service tax implications.
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Distribution Agreements
Key Provisions Key Provisions
Object and Scope of Supply;
Consideration;
Performance Review/Sales Target;
Exclusivity and Non‐Compete;
Protection of Intellectual Property
Product Warranty;
Ancillary Services;Termination;
Confidentiality;
Warranties and Indemnities;
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Employment Agreements
Requirement of Employment Agreements in a Joint Venture
Retention of Key Management Personnel;Personal Involvement of the Promoter Director(s);Key Employee may have a trade mark in his/her name;
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Employment Agreements
Key Provisions Key Provisions
Tenure of Employment;Scope of Work/Services;Non‐Compete (should not be very rigid on Employee);Remuneration;Performance Linked Bonus;Right of Company over any Intellectual Property developed by Employee during the Course of Employment;
Delegation of Rights and Responsibilities;
Other Benefits such as ESOPs, Sweat Equity etc;
Non Disclosure Undertaking;
Termination;
Post Termination Restrictions;
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