Oscorp Limited, a Chinese Company, and Quazi Designs, a United Kingdom based company, entered an agreement that provided for their collaboration in widget designing. The joint venture arose due to both companies recognition of the benefits arising from such cooperation. Due to its long experience in the designing of widgets, Quazi will undertake all the design work and review Oscorp projects to provide suggestions for their improvements. Oscorp in its part would undertake the fabrication of widgets per designs provided by Quazi. While the designs will remain the intellectual property of Quazi, both parties have to agree on the commercial exploitation of the information.
Background intellectual property refers to the developer rights essential to the supply of the required software, and that were in existence before the collaboration. In the case of Oscorp and Quazi, Section 1 acknowledges the existence of Quazi’s expertise in designing of widgets. This clause, as such, is further cemented by Section 2 that acknowledges the usage of designs provided by Quazi’s Limited. Foreground intellectual capacity, on the other hand, is the intellectual property that arises during the collaboration up to the property in the software produced. Section 5 of the agreement vests all the design intellectual property in Quazi, although both parties have to consent prior to exploitation of the knowledge.
Quazi may view Section as too narrow and restrictive in its scope. By requiring Quazi to keep all information given to it confidential, the clause is one sided. While a non-disclosure clause fetters Quazi, Oscorp has no such restrictions. Quazi may wish to widen the agreement to provide that Oscorp will also keep any trade secret shared with them during the collaboration confidential. Such broadening of the section would ensure the security of both firms trade secrets.
Quazi may wish to include a provision that restrict Oscorp from dealing with any other company during their period of collaboration. While the memorandum is not usually a legally enforceable document, a lock-out provision would be binding during the period it was operational. Such a provision would be essential to ensure that both companies could go ahead with their negotiations in good faith by providing for exclusivity while negotiating.
Quazi may also wish to include a timetable clause in the agreement. Where huge expenses are incurred before reaching a final agreement, Quazi may wish to have a time limit between the signing of the agreement and conclusion of negotiations. Such a time limit may be necessary to reduce operational cost and to keep the negotiation on track. The usage of the memorandum as a negotiation tool would also help to determine how the costs incurred before the final agreement are shared. While they may be minimal, whichever party that bears them ought to be aware from the beginning. Where the cost may be substantial, a way of sharing the cost will have to be included in the memorandum.
Quazi may also wish to limit Oscorp from future partnership with rival companies. Such restriction would be fashioned to ensure that Oscorp did not within a certain period after the dissolution of the joint venture collaborate with Quazi’s direct competitors. The restriction may be necessary to prevent poaching of Oscorp by a rival firm.
Campbell, D., 2009. International Joint Ventures. 1st ed. London: Kluwer Law International.
Information Security, 2008. Securing Intellectual Property: Protecting Trade Secrets and Other Information Assets. Revised ed. London: Butterworth-Heinemann.
Schulze, R., 2007. New Features in Contract Law. 1st ed. berlin: Sellier, European Law Publishers.