Intellectual Property Issues

■ If any software or other products are exchanged for purposes of training, demonstrations, and other marketing activities, the software and products should be provided under their standard commercial licenses and product terms and conditions. Since the software and products are not being provided as the result of a normal license or purchase transaction, the marketing agreement should make clear the software and products are provided on an “as-is” basis. The software and products should be returned on expiration or termination of the marketing agreement or at any time on the providing party’s request.

■ In addition to providing product samples, the parties to the joint marketing agreement may provide other materials, information, and content for use in the joint marketing activities. All of these items likely constitute intellectual property and confidential information of the providing party and should, therefore, be provided under a narrow license permitting their use only in connection with the joint marketing activities, as authorized by the providing party.

■ Since most joint marketing activities will involve the use of one or both of the parties’ names and trademarks, every joint marketing agreement must include a specific license governing use of those names and trademarks. The license is generally written as a “cross-license,” meaning that each party grants the other party a license to its names and trademarks.

  • - Avoid trademark licenses that include all of a party’s trademarks. Instead, a license should be granted only to those trademarks a party specifically identifies as being subject to the license and necessary to support the joint marketing efforts of the parties.
  • - Trademark licenses must include provisions requiring the approval of the trademark owner before any use is made of its trademarks.

■ The joint marketing agreement should also contain a clear statement that each party reserves all rights in its intellectual property and that neither party is transferring or assigning any rights in its intellectual property. This will assure each party that it has the appropriate protection of its intellectual property during the relationship and after any termination or expiration of the agreement. They key concept is that neither party should be placing their intellectual property at risk by virtue of an engagement of this kind. This does not, however, mean that the parties might agree to enter into a professional service agreement at a later time that would provide for the transfer or assignment of intellectual property rights.

■ Since the parties will be working closely together and discussing their mutual products, there is the potential for corruption of a party’s development process. If the other party suggests an idea already under development or that would have been arrived at in the ordinary course of the evolution of your products and services, your development process may be irretrievably tainted. That is, your company will be placed in the position of having to prove it independently arrived at the idea without reference to any information provided by the other party. This can be a difficult hurdle to overcome and would require litigation to resolve.

■ As a baseline means of mitigating this threat, it is common to include a residual knowledge and feedback clause. This clause permits a party to continue to use the information its employees retain in their unaided memories, provided the information does not infringe the other party’s intellectual property rights. It also addresses the situation in which one party specifically makes suggestions to the other party for the improvement of its products.

Warranties and Disclaimers

■ The joint marketing agreement should include basic warranties ensuring that the parties have the ability to enter into the agreement and will comply with applicable law. Other warranties may be appropriate in particular engagements (e.g., noninfringement warranties, antivirus warranties).

■ Apart from the foregoing basic warranties, joint marketing agreements commonly include strong warranty disclaimers and limitations of liability.

■ Unless the agreement includes specific revenue commitments, a disclaimer should be added making it clear that neither party is guaranteeing the other party will derive any specific revenue from the relationship. While revenue commitments may be acceptable in some relationships, if they are not applicable, it is important to make that clear in your joint marketing agreement.

■ No agency. Since the parties will be working closely together and participating in joint efforts, there is the possibility the relationship may be construed as a partnership or engagement in which each party is acting as the other party’s agent. If this is not the case (and it is usually not), the joint marketing agreement should state clearly that such an agency relationship is not intended.

■ Limitations of liability. Apart from standard carve outs to any limitation of liability (e.g., damages arising as a result of a party’s breach of its confidentiality obligations, damages arising out of a party’s misappropriation of the other party’s intellectual property, damages arising out of or payments to be made pursuant to a party’s obligation to indemnify the other party), the agreement should disclaim essentially all other liability for both direct and consequential damages. If referral fees will be paid, it is common to limit liability to a multiple of fees paid over a specified period of time (e.g., the amount of fees paid in the three months prior to the incident that gave rise to the claim).

■ Indemnification. A mutual indemnity is normally included to protect against violations of law or misuse of the other party’s intellectual property. As noted above, it is common that damages arising out of and payments to be made pursuant to a party’s obligation to indemnify the other party are carved out of (i.e., excluded from) any disclaimer of consequential damages, cap on direct damages, or any other limitation of liability.

Term and Termination

■ The agreement may contain a term, which may be a particular period of time (e.g., one year). Following the initial term, the agreement would typically automatically renew for additional one-year terms unless either party gives notice of its intent not to renew.

■ Unless business reasons dictate otherwise, the parties typically retain the right to terminate a joint marketing agreement for its convenience (i.e., at any time and for any reason or no reason at all) on written notice to the other party.

■ In most cases, either party should have the right to terminate a joint marketing agreement if the other party breaches the agreement.

Summary

Joint marketing agreements are used in cases where two or more parties come together to jointly market and promote a product of one of the parties or a product or service that the parties have jointly developed. In order for joint marketing relationships to be successful, it is essential that each party shares information about its products with the other party. As a result, the parties’ primary concern will be to protect their intellectual property rights. Where referral arrangements are agreed to in joint marketing relationships, the parties will want to be specific about the scope of the referral requirements and the revenue share that is required. Care should be taken to ensure that if a joint marketing agreement includes development-like or resale-like requirements, then the appropriate relationship be structured.

 
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