General features
of contracts for natural product collaborations
(Technical Report)
Agreement Features
Title:
Agreement Between --- Company and --- [Names and
addresses: date]
Recitals:
Whereas Company desires to obtain selected plants/extracts/pure
natural products in order to screen, assay and develop novel therapeutic
agents and whereas [ --- ] is interested in providing same under the
following terms and conditions, the parties agree as follows:
Agreements:
[ --- ] will arrange for the provision to [---]
Company of up to [#] of different plants/extracts/pure natural products
in [#] quantity each at a rate of [#] samples per [#]. It is common
that the means of purification or preparation of such substances is
described here or in an exhibit. It is also common that the Company
involved wishes to receive in advance a list of the materials potentially
available so that they can make selections of those it wishes to receive
and exclude those it has already or has no interest in having. It is
also common that the labeling of the sample is also described here.
[ --- ] will also arrange for resupply of those
items found to be of continuing interest by Company. The cost of such
resupply is usually significantly greater than that indicated in the
previous paragraph and is usually spelled out ($/Kg, for example). This
can, alternately, be negotiated in a subsequent agreement. It is sometimes
specified that [ --- ] Company will make every reasonable effort to
obtain additional supplies from [ --- ] before going to a third party.
It is usual also to require information about the location of collection,
time, and the deposit of a voucher specimen in a recognized herbarium.
It is also common to specify that payment will take place from a suitable
invoice within [#] days of receipt of the sample in the premises of
[ --- ] Company. In some cases, money is advanced to defray reasonable
out-of-pocket collection costs in advance of receipt of invoice and
receipts.
[ --- ] warrants that he/she has the authority,
licences and ability to perform these duties and to export the products
and that [ --- ] Company will not be subject to claims or liabilities
by other parties in connection with the work covered by this agreement.
[ --- ] Company has the right to perform such biological
tests as it deems appropriate. Such tests will be performed with reasonable
promptness (within [#] weeks/months) following receipt of the sample.
[ --- ] Company will inform [ --- ] whether it has any further or continuing
interest in the materials provided or has obtained positive results
and wishes to continue working on the material. A time limit for this
information is also specified. Six months or a year following receipt
of the sample is common.
Company has the exclusive right to decide which
leads it will pursue.
will indicate whether [ --- ] has previously investigated
or provided samples of these materials previously to a third party.
It is common that it is specified that no third party not under obligative
control on either party may receive a sample of the material unless
[ --- ] Company informs [ --- ] that it has permission to do so or that
it has no further interest in the material. This restriction may have
a time limit associated with it.
[---] will not collaborate with a third party on
these materials unless permitted in writing or released from obligation
by [ --- ] Company.
[ --- ] will not patent these materials independently
of Company unless released to do so in writing.
Product development and royalties:
Discoveries made by [ --- ] Company with these samples
are the property of Company although they may be jointly or individually
be patented depending upon negotiation, with legal assistance if necessary,
of inventorship.
The Company owns the materials generated as a result
of the contract. Inventorship represents intellectual property and does
not relate directly to material ownership.
[ --- ] Company will use its legal resources and
funds to patent the fruits of this collaboration in all economically
significant countries, including the country of origin of the samples,
if it decides to do so.
[ --- ] will provide all reasonable assistance (records,
signing documents, etc.) to Company to support
the effort to obtain patent protection.
The patent will belong to [ --- ] Company. Several
articles dealing with various aspects of patenting have been published
lately. The reader is referred to Mitscher et al (1994) and Pidgeon
(1993) and the references contained in them.
[ --- ] Company will notify [ --- ] if it decides
to isolate the active principle or a plant or extract. The sponsoring
company sometimes makes provision for the collector to do the isolation
if the two parties agree to this. The length of the agreement may be
extended when continuous work of this type is undertaken.
[ --- ] Company agrees to pay a royalty of [typically
2%] of Gross or Net Sales [which is specified] if a product results
from a sample provide by ] under this agreement, provided that [ ---
] Company was not previously in possession of this material from a third
party, or not isolated previously independently from a different source
in their own laboratories from a sample not provided by [ --- ]. Sometimes
an upper limit is placed upon the total magnitude of the royalties to
be paid (#$M) or payments to cease when the patent expires. The royalties
are commonly adjusted downward by reasonable charges against the Gross
or Net Sales (discounts given to purchasers, credits for unsold remanents,
transfer charges, customs costs, excise taxes, and the like). The actual
magnitude of the royalty which may be proffered by a firm is commonly
a function of the intellectual content and state of the material actually
provided to them. For example, a pure and novel substance is more valuable
than a crude extract because of the defined nature of the material and
the previous labor expended upon it. Crude extracts provided on the
basis of a specific criterion are generally more valuable than samples
which have been collected randomly.
It is becoming increasingly common for the sponsoring
company to specify that a percentage (commonly 5 0%) will be paid directly
to the collector and the remainder to a foundation jointly chosen by
the collector and the company. Such foundation is to use the funds to
promote conservation of biomass and biological diversity in the country
of origin of the materials, to ensure an equitable economic benefit
to the country of origin of the materials, and to develop long term
strategies for sustainable cultivation of targeted biota in the country
of origin.
Transfer among subsidiaries of the sponsoring company
are not normally considered sales nor is distribution of free samples
to clinicians or promotional samples provided to physicians.
If the product sold contains other active ingredients,
the value for royalty purposes will be arrived at proportionally.
Royalties are normally calculated either biannually
or annually and are paid according to an agreed upon schedule ([#] months
after the end of the accounting period).
Royalties are normally paid in the currency of the
country in which the sponsoring company has its principal business location.
Appropriate books will be maintained by [---] Company
specifying quantity sold, total billings, sales to governments, royalties
due, and the like.
These books will be reasonably available for inspection
by a Certified Public Accountant selected by should [ --- ] wish to
verify the royalties. In this case, the costs of this will be borne
by
Confidentiality:
Each party can freely disclose relevant information
of a proprietary or confidential nature to each other and to those subordinates
bound to them who agree to maintain confidentiality. Confidential written
material should be so marked.
Neither party will disclose to third parties such
confidential and proprietary information without written permission.
The duration of this restriction is usually negotiated.
These disclosure restrictions do not apply to information
already known to the receiving party. This should be in the form of
documentary evidence. Also excluded is information already known to
the public or which becomes known to the public through no fault of
the parties in this agreement. Also excluded is information revealed
by third parties with the legal right to make such disclosures. Disclosure
to appropriate third parties for the purpose of cooperating in getting
a patent is allowed.
Either party will inform the other promptly if an
invention is believed to have been made.
Miscellaneous:
Termination of the agreement can be made by either
party on [#] days notice in writing to the official
address to the other party. Prior obligations survive
the termination.
This is the entire agreement. It can be amended
by [ --- ] and [ --- ] Company only in writing.
[---] and [ --- ] Company remain independent of
each other. They do not become partners, agents, etc., of the
other party by virtue of this agreement. Neither can independently obligate
or bind the other party without permission.
Notices required or permitted are to be sent to
specified parties at specified addresses by verifiable means of
receipt (registered letters, etc.).
Neither party may use the name of the other party
in advertising, brochures or other literature without written
permission.
The terms of the agreement are confidential to the
parties executing it.
The agreement is governed by the laws of the country
or state of [ --- ] Company.
If any part of the agreement is subsequently discovered
to be invalid or illegal, the remaining parts remain in
force.
Unresolved disputes are settled in court, usually
in the country of Company.
The agreement begins with the last dated signature
executed below.
Signatures, titles and dates:
