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Tips for the Product Development Agreement

Imagine you’ve spent thousands of dollars and countless hours researching and designing a better hydrogen cell battery for use in the automotive industry and have been in contact with a manufacturer who has agreed that your battery will revolutionize the industry and, the manufacturer is willing to help you develop your idea. You’ve gone beyond talking about your idea and have agreed in concept with the manufacturer that you will jointly develop and market the battery. Yet, you’re not sure how to protect your interests in your idea, and you want to make sure that you receive the fruits of your efforts; what do you do? The answer – enter into a Product Development Agreement with the manufacturer.

To make sure you receive that to which you are entitled, here are a few things you can do to solidify your path to success:

  • Ensure that the agreement properly and completely identifies the parties to the agreement. If the manufacturer is a corporation, and you’ve been dealing with someone who has represented they are an officer of the corporation, ensure that the complete and accurate name of the corporation is contained in the agreement. There should also be a provision in the agreement stating that the person signing the agreement is authorized to act on behalf of the corporation.
  • Ensure that the agreement clearly explains the expected time within which performance under the agreement is to occur.
  • Ensure the agreement holds withdrawal provisions that clarify whether either or both parties may withdraw from the agreement and, if so, under what circumstances and the process for withdrawal.
  • Ensure the agreement contains a detailed description of the product to be produced and of where the product is to be sold.
  • Ensure that a schedule for the development be set including milestones and a way to withdraw if those milestones are not met.
  • Ensure that the agreement contains comprehensive confidentiality provisions to ensure the confidentiality of each party’s proprietary information; it is important that the development and the fact of the relationship remain confidential both during and after the development of the product.
  • Ensure the consideration of each party’s intellectual property interests during the term of the agreement as well as after the expiration of the agreement.
  • Ensure that the owner of the developed product is identified as well as each party’s pre-existing intellectual property rights.
  • Ensure that provisions are included that provide for interference by law or other outside forces. For example, what will happen if governmental action makes development of the battery example impracticable or impossible? You would need to consider Environmental Protection Agency regulations as well as all environmental laws.
  • Ensure the agreement contains mediation or arbitration provisions in the event of a breach by one of the parties, how that breach will be handled. What will be the likely damages that may be expected, or are those damages difficult or impossible to assess
  • Ensure that the agreement contains a comprehensive attorney’s fees provision to help shift the attorney’s fees to the prevailing party. Remember, in California, each party must bear their own attorneys’ fees unless an agreement or statute provides otherwise.

To ensure your product remains yours, consider using the services of a reputable and knowledgeable attorney that understands your product and its importance to you. With a background in physics, biology, chemistry and mathematics, Michael Leonard, Esq. of San Diego Corporate Law is the attorney you can trust to assist you with Product Development Agreement and how it should be prepared. To schedule a consultation with Mr. Leonard to discuss your Product Development Agreement, or any other business-related matter, you can contact him by visiting San Diego Corporate Law or by telephone at (858) 483-9200.

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Schedule a Consultation: 858.483.9200