You enter into many similar contracts over the course of a year, or decade. They are low-risk, in the senses that no major liability is likely to be incurred from non-performance, and none of the parties is likely to sue one another. You want to streamline the contracting process, to reduce costs and speed up negotiations.
What do you do? Perhaps you get together with other people in your sector, and decide to use a standard template agreement. But everyone has their own views on what the agreement should say. Eventually a compromise is reached, and a template is adopted.
But democracy is messy, and decisions by committees can be even messier. Some terms are included in the template because a member of the committee was influential and demanded that the term be included, rather than because the term was essential. Perhaps someone had encountered a particular issue in negotiations shortly before the committee met. And other terms are included because they were in a source document that the committee used when preparing their template, and no-one queried their inclusion.
No-one wanted to spend money on an expert contract drafter, to convert the committee’s decisions into high-quality, coherent text. Or perhaps committee members felt that they were sufficiently expert at drafting. Who needs an outsider sticking their oar in?
The resulting document is a bit of a mess, but it has the advantage that people can readily accept its terms. Or, perhaps they accept most of its terms, but each organisation has its own variation on the template. Perhaps these imperfections in the document and the process don’t matter too much, if the overall effect is to make negotations quicker and more efficient.
Some years go by, and a consensus emerges that perhaps the document isn’t as perfect as it might be. And anyway, don’t contracts need to be updated from time to time, to reflect changes in the law? So a new version of the template is generated. Everyone agrees that the new version is much better than the old one.
This story is prompted by some internal training that IP Draughts gave last week, on a version of the Brunswick long-form collaboration agreement. As he wasn’t involved in the evolution of this template agreement, the above summary may be as factually accurate as the Crown TV series is about the recent history of the Royal Family. But some of the essence is likely to be true – IP Draughts has pieced together what he does know about Brunswick, and his experience of other contract template projects.
The purpose of the Brunswick agreement is set out on a page of the PraxisAuril website, to which a link is given on the ARMA website. It includes:
It is intended that both the Short-Form Letter of Agreement and the Long Collaboration Agreement will govern collaborations which are funded by research councils and charities where:
(i) the award is made for a research project (not a Centre) under standard terms;
(ii) the collaborators are academic or non-profit making institutions;
(iii) the collaborating institutions are named in the application as undertaking a specific and significant proportion of the project; and
(iv) the terms of the award do not restrict the universities’ ownership or publication of research results or include warranties of any kind.
IP Draughts’ training involved going through a university’s version of the Brunswick agreement, clause by clause, and discussing the content. It seems that this university has modified an old version of the template. He has looked at the latest version of the template on the ARMA website, and some of the weirder provisions of the template have been deleted or improved. But there are still plenty of oddly-drafted clauses in the latest version.
IP Draughts appreciates the merits of having a standard agreement that everyone in a sector uses. And he understands that, as long as the template covers the important issues that arise in agreements of this kind, being overly-concerned about drafting may not be productive, particularly given the need to get the text approved by a committee, and the dynamics of some committees. But even so, when an agreement is used many hundreds of times each year (and perhaps thousands of times – he has only seen a small sample of the total number), wouldn’t it be a good idea to make the document an example of best practice in the field of contract drafting? And then get universities to agree to accept the text verbatim, and not create their own templates based on the official template?
The more that these steps are taken with low-risk, familiar documents, the more hope that contract managers in the university sector will become familiar with the merits of streamlining negotiations, and this will hopefully influence the negotiation of more complex agreements.
IP Draughts would understand it if the authors of the latest Brunswick agreements pushed back on IP Draughts’ assertions about quality (even though he has acknowledged, above, that the latest version is much better than what went before), as he hasn’t given any examples of why he thinks the current version of the long-form agreement is less than perfect. So, here are a few examples – the first five that he found on a quick scan of the document.
- Clause 6.1 states: “The Parties will each use their reasonable endeavours to collaborate on the Project as described in the final submitted proposal to the Funder in respect of the Award as set out in Schedule 1.” Why is this obligation limited to reasonable endeavours? Shouldn’t they have an absolute obligation to collaborate? If the concern is about not guaranteeing results, this could be better addressed by a clause on this topic.
- Clause 6.4 states: “The Parties shall establish a committee to advise on the strategic direction of the Project as a whole (the “Board”), the terms of reference of which are set out in Schedule 3.” Schedule 3 states: “All significant operational matters relating to the Project will be decided upon by the Board…” So, does the Board advise or decide? These are very different roles. If the Board has power to decide, should their powers exclude a right to change the work obligations or payment rights of a party?
- The definition of Intellectual Property in clause 8.1 includes: “trademarks, trade names and service marks”. Leaving aside the technical points that “trade mark” is two words in English law and usage, and that trade marks can be for services (so that there is no need to separately refer to service marks), IP Draughts is concerned about including trade marks within a generic definition of IP in the context of a research collaboration agreement. Is it really intended that a university’s Background IP consisting of its trade marks should be licensed to the other parties? Does the contracts manager even have authority to make that commitment on behalf of the university, or is there a separate department that has managerial responsibility for trade marks?
- Clause 8.2 states: “The Parties agree that any improvements or modifications to a Party’s Background IP arising from the Project which are not severable from that Background IP will be deemed to form part of that Party’s Background IP…” The concept of “severable” IP is not defined or explained. It probably comes from EU competition law, and in particular the 2004 version of the Technology Transfer Block Exemption Regulation, Article 5, which effectively permitted an obligation to exclusive license or assign licensee improvements to the licensor if those improvements were not severable, i.e. they infringed the licensed IP. That usage no longer appears in the current version of the TTBER, which came into effect in 2014.
- Clause 8.4 (Option 1) states: “Any Joint Owner of any of the Joint Results may commercially exploit the Joint Results upon consultation and agreement with the other Joint Owners.” It is unclear why both “consultation” and “agreement” are mentioned. They are different concepts in law. If I have an obligation to consult with you, the ultimate decision remains with me. If I have to reach agreement with you, you have a veto. Consultation should probably be dropped. IP Draughts strongly dislikes the “positive” tone of this quoted sentence. It is, he believes, trying to say that a party may not commercially exploit the Joint Results without the agreement of the other Joint Owners. It would be clearer to say this. And what does “commercially exploit” mean in this context? Is it referring only to licensing and assigning one’s joint interest, or does it extend to internal commercial use?
These are just the first 5 issues that IP Draughts noticed. There are plenty more. IP Draughts acknowledges that the latest version is hugely better than the version that went before – to try to quantify it, he gives the new version five or six out of ten rather than one out of ten. But it needs another major push to get it up to eight or nine.