Drafting a Comprehensive Joint Development Agreement Template

The Basics of a Joint Development Agreement

A Joint Development Agreement ("JDA") is a crucial legal document in which two or more parties allocate responsibility for the development of their respective intellectual property ("IP"). This can serve as a beneficial tool to save both time and money by establishing a streamlined approach to sharing technologies and knowledge.
A JDA is designed to lay out and ultimately clarify the parties’ rights and obligations to each other with respect to the relevant technology. Commonly used in the context of software and technological development, JDAs may also frequently apply in joint ventures. In a joint venture, the parties, who may have been in commercial competition prior to entering the agreement, ally together to reach a certain goal. For instance , within the pharmaceutical industry, companies may pool together resources to create a novel drug. The JDA in such a situation would designate the allocation of IP rights and responsibilities between the parties, while providing each party with a vested interest in the outcome of the development.
Over time, a JDA serves as a vital reference point in the course of the parties’ business collaboration, domain expansion and acquisition, and monetization or commercialization of the resulting IP. While a JDA may take various forms, its general structure often encompasses several key elements including: purpose, scope, term, roles and responsibilities, IP ownership, licensing considerations, as well as termination provisions.

Essential Features of a Joint Development Agreement Template

To develop patents in the most cost-effective and productive way possible, it is imperative that a D & D agreement template include the following basic elements:
a) Scope of Work (SOW). This clause should outline the exact nature of the work to be performed under the agreement, and the associated timeline for the performance of such work. Depending of the nature of the work, it may be useful to break down the specific activities to be performed into separate milestones or objectives. Failure to adequately define precisely what a party is to do for the other can result in costly and protracted litigation.
b) Intellectual Property Rights. A JDA is intended to provide that any IP created by one party in connection with the agreement will be ultimately assigned to the joint venture. While it is customary to provide that each party retains its own pre-existing IP, unlike many contracts it is also customary in this type of contract for the parties to test the waters by reserving additional rights until the IP is actually assigned. The agreement should thus provide that the joint venture has rights to make, use or license any such IP if it is not assigned, and that the parties promise not to individually or disclose, use or license such IP unless their other party fails to do so within a specified timeframe.
c) Confidentiality. A confidentiality clause should include a definition of confidential information plus a mutual non-disclosure obligation, plus an restrictions on use and retention of confidential information, plus a requirement to return confidential information after termination. New startup companies are often lax and underprotective of company confidential information. This can have dire and devastating consequences. Confidential information is a company’s lifeblood and should be carefully safeguarded. The JDA is a perfect opportunity to re-emphasize that Information is power, and the power of confidential information should never be given away lightly or without consideration. Also, as a matter of good business sense, the confidentiality clause should be reciprocal and reference the obligation of the parties to have their employees and contractors abide by its terms.
d) Termination. This clause should provide a clear termination process, including the rights of each party upon termination. Designating minimum notice of termination is also prudent, so that both parties can plan accordingly. Note that a JDA that concerns joint development or commercialization of a product would typically have a periodic (e.g. annual) renewal provision. Otherwise, the terms of the JDA will end without warning, exposing either party to the risk of trying to untangle its affairs with the other.

The Advantages of a Joint Development Agreement Template

An effective joint development agreement template offers a variety of benefits that can help streamline the process and reduce legal risk. By utilizing a structured template, businesses can increase efficiency in negotiations and minimize costly legal disputes. Here are some of the key advantages of implementing a JDA template.
By using a preformatted contract template, businesses can ensure that each JDA they enter into includes the same terms and clauses. This consistency can be beneficial both for record-keeping purposes and when dealing with multiple development teams. For example, if a business has three separate development teams working on the same project, it may choose to set up a similar JDA between each team. Having a single template to work from will allow them to ensure that any important information is not overlooked. It also helps ensure that businesses take the same approach to issues such as payment structures or intellectual property ownership.
Knowing the most critical terms and clauses to include in an agreement can help speed up the negotiation process. In many cases, disputes between parties arise from disagreements over specific terms that they include or omit in their JDAs. In order to avoid these issues and get to work on product development, businesses should consider creating a negotiation checklist based on their JDA template. This list can help them identify the most critical aspects of the agreement, while allowing less important provisions to be altered, deferred, or omitted altogether.
Many agreements contain clauses that are either irrelevant or outdated. Unfortunately, these unnecessary clauses can lead to legal disputes down the road. When developing a JDA, businesses should make sure that they only include clauses that they consider necessary or that they believe any potential future partner would consider necessary. By using a template, businesses can avoid frequent mistakes that could lead to legal issues.

Challenges to Expect and Potential Solutions

Even with the best intentions, issues can arise when it comes to drafting and executing a JDA. Thus it is essential to be prepared for any number of unwanted situations. Here is a list of some common issues that can emerge while creating a JDA as well as potential solutions:
1 – Lack of clarity or justice with the funding
Funding issues can often lead to problems when putting a JDA into an official legal document. Any build costs should be clearly outlined in the agreement to avoid any confusion about who should be responsible for making these payments.
2 – Disputes with intellectual property rights
With so many legalities involved with a JDA, it is essential to protect informal agreements with third party collaboration until the agreement is formally executed. It is also essential that all parties clearly record any intellectual property rights before the JDA is executed to prevent drama later down the line.
3 – Not anticipating all contingencies
During the drafting process, spend time identifying all potential issues that could emerge during the development process. In doing this, it is easier to put relevant exit strategies in place to prevent the project from being delayed or derailed.

Adapting Your Joint Development Agreement Template

To maximize the effectiveness and usability of a joint development agreement template, it’s crucial to focus on elements that allow for easy customization. This includes flexible clauses and negotiable terms that can be adapted to fit the unique needs of each partnership.
When drafting a JDA template, drafting the right clauses is critical. Having carefully constructed flexible clauses addresses the fact that while some partnerships may require intricate and detailed agreements, others may find such complexity unnecessary. These flexible clauses allow the parties to select the level of detail that best suits their collaboration.
Moreover, not every partnership faces the same risks. Parties may have vastly different resources and risk tolerances. Therefore , it’s essential to include flexible clauses that can be adapted according to the parties’ willingness to accept risk. The easiest way to address this is to define the applicable law in such a way as to provide parties with options on how much law governs the agreement.
The Parties clause is another opportunity for flexibility in the JDA template. For example, if an individual is the driving force behind the IP development, that individual may want to be included as a party in addition to the organization they own or work for. Similarly, if new parties can join the collaboration at a later date, the template should enable the addition of new partners with minimal revision.

Legal Issues and Compliance

When creating and implementing any template, and especially one so potentially impactful as a Joint Development Agreement, it is imperative that one consider the legal implications of the agreement so as to not unintentionally violate statutory obligations and other legal requirements. Such violations may give rise to significant liability. Statutory obligations may include the requirement to comply with specific filing requirements when submitting a JDA to the appropriate government office or otherwise complying with specific requirements for trademark protection. The failure to comply with such requirements could give rise to liability in the form of substantial fines and fees. In addition to possible statutory violations, there may be jurisdictional legal considerations at work under the laws of the state of the parties, including limitations on the scope of JDAs, who may be a party to a JDA and other requirements that may be imposed on the parties or the resulting intellectual property. Administrative regulations are another area that can give rise to legal liability and thus must be considered in creation and implementation of a JDA.

Examples of Joint Development Agreements

The pharmaceutical and medical devices industries are perhaps the best known examples of successful collaborations. Bristol Myers Squibb and Janssen Pharmaceuticals worked together to co-develop clopidogrel (Plavix), an anti-clogging drug, and the collaboration extended to the development of other anti-clogging drugs. One goal of the two companies was to increase market share for the drug, which they accomplished through licensing, "co-promotion" and "co-detailing." Such arrangements are not uncommon in this industry, and, in fact, are widespread in any industry where intellectual property law is robust. These cases serve as models for joint development agreements in industries as diverse as automotive and microchips to pharmaceuticals and biotechnology.
The joint development agreement for clopidogrel provided, in part, that the parties would share in the development costs, in a proportion to be specified in subsequent discussions. The agreement also provided that the parties would own the results of their research and development , subject to certain limited rights of the other party. It further provided that the parties would jointly own any additional inventions or discoveries made in the course of the research and development, and that the parties would grant each other an unrestricted rights to use such inventions or discoveries for any purpose, including without limitation "for the purpose of making, using, importing or selling products." Clearly, the potential overlap between what used in the development process and what might be patentable deserves careful attention. In some industries such as pharmaceuticals, it is not uncommon for joint development/production arrangements to also extend into the marketing and distribution phases.
In other industries, such as semiconductors, the development of chip sets is a frequent joint development arrangement. Driving the agreement will be uncovering what the parties are willing to share, given the intense competition in contemporary hi-tech markets. An important factor is to anticipate the possibility of multiple "spin offs" and to include terms that deal with what happens to that IP.