The growing biotechnology industry can be a minefield of legal issues for scientists and the companies they start, seeking to protect their investments and grow their business. One common topic that every biotech founder should consider is how to prevent leaks of confidential information, so successful biotechnology companies look to a few common types of contracts to address their wide variety of needs.

1. License Agreements

License agreements allow companies to use another  company or inventor’s product within certain parameters set forth in the agreement.. For example, a business that developed a genetically engineered strain of pest-resistant citrus fruit might allow another company with larger growing fields to grow the fruit for three growing seasons. Essentially, the license allows the developer to retain ownership of an item of property while giving another business a limited right to use the property. In this example, the developer will receive a fee from the second business in exchange for the license, and the fruit will be grown more widely – perhaps resulting in future licensing opportunities for the developer.

2. Confidentiality and Non-Disclosure Agreements

Companies that develop new technology face frequent issues with employees and former employees sharing news or details of the technology without permission. Turnover in some newer biotech companies also may be high, leading to former employees working for competitors. Confidentiality and non-disclosure agreements protect companies against information leakage by first, telling employees that there will be consequences if information is leaked, and second, giving companies a legal remedy should the worst happen. These agreements require that certain types of information, such as trade secrets, be kept confidential and are not shared with others without permission from the company. Both current and former employees who signed an agreement while employed can be bound to the terms.

3. Contracts with Suppliers, Government Entities, and Others

Most biotech companies need other companies, such as suppliers, to survive. These relationships among companies work best if memorialized in a contract that details the nature of the relationship, the information to be shared or not shared between the companies, any compensation changing hands, and other details of the business partnership. This type of contract should also specify the legal remedies if either party violates the terms of the partnership. When all the details are in writing, it is much more difficult for one business to wriggle out of its obligations when its profits take a downturn or it moves into a new business area.

Biotech companies look to the future when developing their products, and legal protection for the future goes hand in hand. Michael Leonard, Esq., of San Diego Corporate Law, named a “Rising Star” for 2017 by SuperLawyers, has experience drafting the types of contracts that biotech companies need to remain competitive. To schedule a consultation, e-mail San Diego Corporate Law or call Mr. Leonard at (858) 483-9200.