Contract Issues for Biotech Attorneys

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					Contract Issues for Biotech Attorneys

Massachusetts Biotechnology Council
March 12, 2009

Nutter McClennen & Fish LLP
World Trade Center West
155 Seaport Boulevard
Boston, Massachusetts 02210
Telephone 617.439.2000

   Pre-Agreement Documents

   Overlooked Provisions

   Odds and Ends


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               Pre-Agreement Documents

                •Letter of Agreement, Letter of Intent,
                Memorandum of Understanding,
                Non-Disclosure Agreements, Term Sheets

                •When to use

                •How long to negotiate

                •Appropriate provisions

                •Inappropriate provisions

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               Non- Disclosure Agreements

  Should be mutual, and include data released to
  specific third parties

  Don’t give anything beforehand, but if you do,
  capture it

  Marking/reducing to writing requirements


  Venue for enforcement and legal fees

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               LOI, LOA, MOU, Term Sheets

      What are you trying to accomplish –

      A proposal?

      A memorialization of parties’ discussions so

      Roadmap for further discussions?

      Binding agreement to begin work prior to
      definitive, executed agreement?

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               Pre-Agreement Documents

  Should not take forever to negotiate

  Negotiations can give you a preview of what
  negotiating the definitive agreement may be
  like, and may also help you hone in on what’s
  important to the parties

  Be clear if you have agreed to something in an
  LOA that you absolutely would not agree to in
  the definitive agreement

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               Appropriate Provisions in Pre-Agreement

        What happens if the parties do not move
        forward with a definitive agreement

        Termination and effect of termination

        Credit for advance payments



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               Inappropriate Provisions in Pre-
               Agreement Documents


 Elaborate IP provisions (but you might need
 some, e.g., tech transfer)

 Forfeit of payments made

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               Term, Termination and the Effects of

 How do I get out of this Agreement?

 When can I get out of this Agreement?

 What happens upon notice of termination – wind
 down, financial reconciliation, return of materials
 and confidential information, tech transfer,
 replacement services, etc.

 How do they get out of the Agreement?

 What provisions survive termination?
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               Data Security

 Do they have access to your systems?

 What is their data security policy? Whose
 policy applies?

 Minimum requirements, e.g., encryption

 What about their contractors?

 Data storage

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               Sometimes Forgotten Provisions

    Returned of loaned items/equipment



    Warranties – disclaim, disclaim, disclaim

    Read the Agreement from back to front

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               Odds and Ends

 Performance Guarantees, Letter of Credit, Due
 Diligence – Is this vendor, partner financially sound?

 Letter of Assurance for Homeland Security compliance

 Be careful about setting yourself up for breach and/or
 indemnification liability with reps and warranties– “to
 the best of Company ’s knowledge and using
 commercial best efforts”

 Compliance with foreign laws

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               Negotiating Terms with the 800lb Gorilla

  •At a minimum know what you are agreeing to

  •Doesn’t hurt to ask

  •Mark it up

  •Can we talk? Email?

  •Business objectives

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    • Association of American Medical Colleges
    January 2004 publication “Clinical Trial Contracts”

    • Onecle – Sample contracts

    •Model Agreement Group Initiative (“MAGI”) -

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                  Maria D. Buckley

                  Nutter, McClennen & Fish, LLP

                  Thank you.

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