Collaboration - Being Prepared and Avoiding the Pitfalls
This article summarises some key observations from a legal perspective which, based on our experience, we would recommend are considered carefully before launching into any collaborative arrangement.
Knowing Your Partners
Having adequate knowledge about the other parties to the collaboration (and the individuals involved) is crucially important - both in terms of managing legal risks and being able to develop productive relationships with them. This is especially so if there is likely to be some longevity in the venture or the relationship is a new one. A party's experience and skillset is obviously important to establish at an early stage but it is vital to understand their organisational set-up, financial status, operational history, public profile and reputation as well as raising questions to satisfy your own obligations regarding money laundering, modern slavery and other ESG requirements.
Trust and camaraderie are key ingredients in successful collaborations. Will your personnel be able to work with co-collaborators effectively? Could there be any sensitivities, internal politics or clashes of personality which could derail progress? If so, consider any pre-emptive conversations that need to take place as part of the preliminary groundwork to smooth the way forward. Do all members of the team understand their respective roles, share the same vision and work ethic? It is also worth understanding the parties' respective governance structure and decision-making protocols. Do your contacts have adequate authority to agree terms and make decisions on behalf of their organisation?
Confidentiality
In getting to know your partners and collaborators, there will inevitably be some sharing of information. The level and sensitivity of information being shared is likely to increase over time. Adequately protecting that information is crucial. Non-disclosure agreements (NDAs) should be put in place at the outset. The confidentiality obligations in those documents will usually be reciprocal and time limited. In certain collaborations involving academics or academic institutions, consideration also needs to be given to the inclusion of the requisite academic publication provisions.
There are many versions of NDAs in circulation and online and not all the ones we see are fit for purpose. It is important to put in place terms that are appropriate for the parties involved, the type of information being shared (physical, digital, written or spoken) and the purpose for which that shared information is being used. For example, particularly sensitive information relating to the creation or development of key intellectual property rights warrants more robust protection; where a party is operating from another jurisdiction, legal enforcement of the confidentiality obligations might be more difficult to secure in practice; where a party is engaging consultants or other experts (rather than staff), they will need to be appropriately bound by the obligations if they will be accessing confidential information.
Whilst important to have an NDA, parties do not want to be in a position where they have to legally enforce the terms. Having trust and confidence in the parties you are working with therefore carries a great deal of weight. Make life easier from the outset by having frank discussions about what type of information will be considered to be confidential, ensure that it is clearly marked as confidential and put in place protocols for recording, communicating and storing the sensitive information being shared. From a practical perspective, we would also recommend that care is taken in relation to the disclosure of highly confidential information and that any such information is kept back until a relationship of trust is firmly established. Finally, at each stage of the collaborative journey, revisit the NDA and check it is still fit for purpose.
Setting Clear Roles and Responsibilities
Successful collaborations rely on each partner being engaged and clear about their respective roles, expectations and contributions. Taking responsibility for certain actions and activities invariably involves assuming levels of accountability and risk and this needs to be agreed between the parties from the outset. In our experience, collaborations can fall over when there is insufficient clarity over what each party is expected to do. This invariably leads to a breakdown in relationships and potentially a dispute over liability. Even if roles and expectations are clearly defined (and recorded), this needs to be coupled with a framework for monitoring and evaluating progress and amending or refining those roles as and when required as the project develops.
Understanding Funding Streams
Linked to clarity of roles is having a clear understanding of funding associated with the project - past, current and future. In early stage R&D, this can take a variety of forms - loans, equity investments, charitable grants, government or research council grants or awards. All of these funding arrangements will have conditions attached which will inevitably have a bearing on how a collaborative partner can engage with or contribute to the project. For example, do the funding terms place any restrictions around the ownership of any IP rights or include options for funders or investors? Is there a requirement for research publications to be open access? Does public grant funding throw up any subsidy control issues where industrial collaborators or SMEs are involved? Are there restrictions over commercialisation activities?
We recommend mapping out relevant funding streams, the recipient organisation who is entitled to (and responsible for) the funding and any related restrictions attached to funding at an early stage. This will enable you to clarify whether parties' contributions to the collaboration (and also the subsequent work outputs of the collaboration) can be used and applied as intended. If they can't, there will likely be some workarounds but these are best explored at the outset.
Ownership and Licensing of IP
Clarity on the ownership of IP lies at the heart of the majority of collaborative projects. It is therefore essential that there is a clear understanding between the parties (supported by written records) of the parties' respective contributions by way of Background IP, which should be disclosed and exchanged between the parties at the start of the collaboration process. Cross-licensing arrangements will also need to be agreed in relation to the use of any Background IP for the purpose of the project and (subject to the nature of any arising IP) beyond.
The parties will need to consult in relation to the ownership of any IP arising out of the collaboration and any licensing arrangements that need to be put in place to ensure that the parties meet their respective commercial objectives. The maintenance of IP can be demanding not only in terms of cost but also resource; the arising IP should probably vest in the party who is best placed to meet these demands with the other party being the beneficiary of the required licence terms. However, there is no one size fits all and there are a number of factors to be considered and built into the IP arrangements - not least those arising from the funding streams referred to above, which may extend to the requirement for any IP licensing provisions to be fair and reasonable taking into account the parties' respective contributions and investment. The parties should also consider what happens if the party who is primarily responsible for protecting the arising IP does not do so - should the other party have any rights to do so, and who should bear the cost?
In addition, with academic institutions, there is often a tension between the commercial party seeking patent protection or protecting the confidentiality, and the academic institution wishing to publish.
Documenting Arrangements
As lawyers, we always recommend taking time to document the terms of your collaboration and some funders will insist on it. As with NDAs, there are numerous collaboration agreement templates in circulation and available online (such as the suite of Lambert Agreements) but as with NDAs, making them fit for purpose is crucially important.
They need to be detailed enough for parties to understand what is expected of them and the potential scope of their legal risk if they fail to perform. In inter-disciplinary collaborations with potentially diverse organisations involved, there can be a wide range of issues to consider and reflect in the drafting.
Whilst no one can predict the future (and in a post COVID world we're all too familiar with how the status quo can quickly change), it is worth taking time to discuss what could happen if a party has to withdraw, if the collaboration fails or if priorities change.
Getting professional advisors engaged early on in the planning process can not only help you tease out some of this detail but can also ensure the collaboration is structured in a way to maximise rewards and mitigate risks to all parties involved.
This article was first published by MedCity.