Category Archives: Contract drafting

The lawyer’s role as scribe

sketchIn olden times, long before document-scanning software was invented, a scribe was someone who was employed to make manuscript copies of documents, including legal and religious texts.

In a modern legal setting, IP Draughts uses the term to refer to the contract drafter’s job of converting conversations between commercial negotiators into clear, legally-accurate contract language.

The importance of this role varies between market sectors and types of agreement. Some financial transactions rely on industry-standard agreements, as do some agreements dealing with commodities, such as the shipment of grain. The drafter’s job may be simply to record a few ‘variable factors’ such as specification, price and delivery times.

Moving a little down the scale towards freehand drafting, lawyers who advise on business sale agreements typically start with a favoured template. But they make detailed changes to particular clauses, eg converting an absolute warranty into a knowledge-based one, or carving out exceptions and qualifications to the template terms.

In the field of R&D agreements, commercial parties often agree tailored deal terms that cannot readily be found in any single template. For example, R&D collaborations frequently include ‘what if’ clauses that deal with a range of possible outcomes to a collaborative research project. An obvious example of this is the Lambert research agreements, which now have 7 or 8 variants. The variations deal mostly with one issue – intellectual property. If further standard agreements were prepared to deal with variations in other clauses – payment terms, say, or dispute resolution – the number of templates needed would quickly multiply.

In this world, the commercial parties tend to focus on negotiating the headline issue. Once this has been agreed, there may be numerous points of detail and logic surrounding that issue that the drafter needs to address, if the agreement is not to be full of holes. Sometimes, it may even be necessary to tell one’s commercial colleagues that their solution may work for the scenario that they discussed, but is unworkable in other possible situations, and therefore should be rethought.

Identifying these issues, prioritising them, anticipating what the client is likely to want, and then drafting suitable wording, all take skill and effort. Often this work is done under time pressure.

One of the skills required for this work is the ability to draft clear, accurate contract wording. This skill is not learnt overnight, and some lawyers are concerned that insufficient training in freehand drafting is given in large law firms, where the priority may be to ‘get the deal done’ and where many deals are of the commoditised type referred to at the start of this article.

monkey-pastePractising this skill can sometimes seem a lonely occupation, particularly when one is surrounded by lawyers who have not been sufficiently trained in it, commercial parties who just want to get the deal done, finance directors who are focussed more on the numbers than the words, and procurement managers who see their task as avoiding changes to their companies’ templates. It requires some strength of mind to insist that the drafting is important.

Our recent panel discussion at UCL on Dysfunction in Contract Drafting reminded us that there is a community of professionals who think drafting is important, even if people disagree about some of the details. If you would like to see the recording of that discussion, it is available on YouTube here. Over 400 people have already viewed it, in addition to the 150 or so people who attended the live event. Persuade your colleagues to view it too, and let’s get the viewing numbers up to well over …1,000?

 

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Dysfunction in contract drafting: expert views

perrinThis is your final reminder about a free panel discussion by experts in contract drafting. The title of the discussion is: Dysfunction in Contract Drafting: Are the Courts, Law Firms and In-House Legal Departments Stuck in a Rut?

The discussion will be held next Tuesday, 8 November, from 6 pm to 7.30 pm in the Great Hall, BMA House, Tavistock Square, London. It will be followed by a drinks reception, courtesy of Thomson Reuters.

IP Draughts will be moderating the discussion. The panel members are:

adams4Ken Adams, known to many readers of this blog as the author of A Manual of Style for Contract Drafting (3rd edn, American Bar Association), and a teacher of contract drafting. He will already be in London to give his Drafting Clearer Contracts course on 7 November.

 

Sir Julian Flaux, a former judge-in-charge of the Commercial Court in London. It was recentlyflaux1 announced that he has been promoted to the Court of Appeal. Before becoming a judge, he was a barrister who practised at the Commercial Bar, specialising in disputes involving insurance and reinsurance, shipping, and international trade.

 

gibbonsKate Gibbons, a longstanding partner at the leading UK law firm, Clifford Chance, a specialist in banking and capital markets, and the firm’s Global Knowledge partner, where she has responsibilities in the fields of contract drafting and training. She also has management responsibilities as a member of the firm’s Executive Operations Group.

 

mcfetridgeKristin McFetridge, Chief Counsel at British Telecom, who manages a team that drafts and advises on standard commercial contracts for BT’s global, wholesale, and small-to-medium-enterprises business divisions. Kristin is a dual-qualified New York attorney and English solicitor. She is currently in charge of a programme to redraft all standard contacts of these divisions so they’re clearer, better address customer needs, and reflect a balanced approach to risk.

 

Known Unknowns, etc

If you have registered for the event and will be attending, IP Draughts looks forward to seeing you there.

If you have registered and will not be attending, please un-register as we have a waiting list of people who would like to come. UCL’s experience is that perhaps 25% of people who register don’t turn up, hence the above request for un-registering if you know you can’t make it.

If you have not registered and would like to attend, it may still be possible to attend, please sign up for the waiting list. Book here.

If you have not registered and cannot attend, but would like to see the event, it will be live-streamed on the internet at the following address: http://www.ucl.ac.uk/live/contract-drafting-dysfunction

If you have any questions that you would like to put to the panel, or would like IP Draughts to put to the panel, please let him know via mark@andlaw.eu

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New standard agreements for universities are published

Sir Richard Lambert

Sir Richard Lambert

Have you had sleepless nights? Have you found it difficult to concentrate on Brexit or the US presidential elections, through wondering when the new Lambert agreements, promised many months ago, will finally be issued?

Worry no more: over a dozen new agreements and term sheets are waiting for you on the UK IPO website.

How are they different from the old Lambert agreements, IP Draughts hears you ask. In fact, he is one of those asking. Well, it’s difficult to say, without a line-by-line comparison. Has anyone done such a comparison? The Lambert committee, for example? And could they share the mark-ups? That would be very helpful for the university community.

Comparing the new and the old agreements won’t provide a complete picture, as some of the new documents are completely new, and don’t have an equivalent in the old set. In particular, there are now 7 bilateral agreements, numbered 1-6 (yes, that is confusing – there is a 4A as well as a 4). The old set comprised 5 bilateral agreements. There continue to be 4 multi-party agreements, numbered A-D.

A European consortium: Queen Victoria and Albert, the Prince Consort

An early European consortium: Queen Victoria and Albert, the Prince Consort

IP Draughts prefers to call the documents bilateral, or two-way, agreements, and multi-party agreements, though the documents themselves are named “collaboration agreements” and “consortium agreements” respectively. In IP Draughts’ mind, these official names are not descriptive. Some bilateral research agreements don’t involve a true collaboration, and are merely one party paying another to do research. And most multi-party research agreements are collaboration agreements, as that term is normally used. The name consortium agreement seems to have become popular through its use as a term of art in EU funded research projects, and in this context is synonymous with collaboration agreement.

Sometimes, universities will instinctively select Lambert 2 as a starting point. Its terms are similar to those used by US universities in most cases, ie the university owns the resulting IP, and grants the sponsor a non-exclusive use licence plus an option to negotiate an exclusive licence to commercialise.

From a quick scan through the new Lambert 2, and without the benefit of a line-by-line comparison with the old one, IP Draughts spotted the following:

  1. Many or most of the terms are familiar from the old document.
  2. There seem to be more optional terms, marked in square brackets.
  3. One of the clauses mentions the need for the university to demonstrate public impact in its research, and to disclose certain information for this purpose. “Impact” as an important policy objective for UK universities post-dates the date of publication of the old Lambert agreements.
  4. There are some tediously lengthy schedules that set out policies on issues such as anti-bribery, non-use of child labour, etc. Many large companies now seem to require references to such policies in their standard agreements.

As with the old agreements, the main “variable” between them is their different IP terms. Below is a summary of the IP terms in each case.

Bilateral agreements
No Terms IPR owner
1 Collaborator has non-exclusive rights to use in specified field/territory; no sub-licences (Institution)
2 Collaborator may negotiate further licence to some or all Institution IP (Institution)
3 Collaborator may negotiate for an assignment of some Institution IP (Institution)
4 Institution has right to use for non-commercial purposes (Collaborator)
4A Each party has right to exploit certain results created during project and takes assignment of those results. Institution has right to use for academic and research purposes, Collaborator for research purposes (Both)
5 Contract research: no publication by Institution without Collaborator’s permission (Collaborator)
6 Institution has right to use for academic and research purposes (Collaborator)

Multi-party agreements
No Terms
A Each member of the consortium owns the IP in the results that it creates. They grant each other party a non-exclusive licence to use those results for the purposes of the project and any other purpose.
B The other parties assign their IP in the results to the lead exploitation party (or the lead exploitation party is granted an exclusive licence).
C Each party takes an assignment of IP in the results that are germane to its core business and exploits those results.
D Each member of the consortium owns the IP in the results that it creates. They grant each other party a non-exclusive licence to use those results for the purposes of the project only. If any member of the consortium wishes to exploit another’s IP they must negotiate a license or assignment with the owner of that IP.

A new feature in the 2016 Lambert agreements is that two templates for term sheets are provided, one for Lamberts 1-6, and one for Lamberts A-D. In IP Draughts’ view, these are not particularly useful documents. They are very detailed and lengthy. If one is going for that amount of detail, it will often be better to move straight to negotiation of the actual agreement. IP Draughts has previously commented on his preference for term sheets, MOUs, heads of agreement and similar documents to be brief, perhaps no more than 2-3 pages. For instance see this article: Keep the Term Sheet Simple. Pretty please…?

IP Draughts is aware that some UK universities use modified versions of the (old) Lambert agreements. It will be interesting to see if those documents are updated to reflect the new Lambert terms. If not, we may end up with a proliferation of versions, and the original Lambert message – that parties should use the Lambert agreements rather than their own, favoured documents – may be further diluted.

 

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Legal drafting issues in medical research

biobankIP Draughts has been reviewing a large number of publicly-accessible documents used in medical research, particularly in the context of what are variously known as tissue libraries or biobanks. In other words, collections of materials taken from patients and intended for use in research. The materials might include body tissue, cancerous cells, or blood. The research might lead to the development  of diagnostic products or therapies for human diseases and conditions.

The documents currently on IP Draughts’ desk include patient consent forms, information leaflets, material transfer agreements, and policy guidance notes. Reading these documents, it is striking how much variation there is in the language used to convey similar ideas, and how difficult it seems to be to communicate clearly and accurately.

IP Draughts doesn’t underestimate how complex the task is. The drafter needs (but often seems to lack) a wide range of skills, including:

  • Regulation. How to comply with and explain complex laws and regulations, such as the Human Tissue Act and Data Protection Act. Often there are several layers of regulation, each with their own vocabulary, including those applying to human tissue, associated data, data protection and medical ethics.
  • Contract drafting. How to draft documents in a legally accurate way. For example, in identifying the parties to an MTA. Organisations such as  “the Loamshire BioRepository” (to anonymise the name in an MTA in front of IP Draughts) doesn’t exist as a legal entity, and is simply a convenient name for a collaboration between Loamshire University and Loamshire Hospital NHS Trust. Referring to the Biorepository as the provider of the materials is unclear. At the end of the document, it is unclear whether the person asking for the materials is an individual researcher or an institution. Failing to identify the parties to a contract is a very basic mistake. In the same document, the drafter clearly doesn’t understand the conventions on using defined terms; he defines the “Material”, then uses the expression ‘Material’ with pointless and weird single inverted commas.
  • Science. How to communicate with researchers, whose focus is likely to be mainly on their scientific projects, and less on the details of compliance with legislation.
  • Donors. How to explain, at a level suitable for the general population, the nuances of the permissions being sought – eg the range of research in which the human materials will be used, the right of the person to withdraw consent, why individual-related information on the outcome of the research will not be provided (it should be done by the patient’s doctor, not by a research team; and anyway, if the research has been anonymised, the researchers won’t know the identity of the patient, etc)
  • Communicating at a time of grief. In the case of material to be taken from a corpse, how to communicate with grieving relatives who are being asked for permission to use the body of a recently-deceased person for medical research, or to confirm their consent to instructions given by the deceased before his or her death

bodyReading through a selection of documents, IP Draughts is left feeling that the drafting of documents within a complex regulatory regime should be a multi-disciplinary team effort, in which the best communicators among doctors, nurses, researchers, regulatory experts and lawyers should be engaged. Instead, the drafting seems often to be left to someone to ‘muddle through’ as best they can.

One of the areas where these issues come up is in relation to IP and property issues arising from the use of materials in research. These issues arise at several levels:

  1. As a matter of public policy and law, it may not be possible for there to be property in body parts, though there seem to be some exceptions to this principle. Similarly under the EU Biotechnology Directive, some aspects of the human body are not patentable. Therefore, referring to a biobank as owning materials, or owning the IP in materials, may or may not be legally meaningful.
  2. Linked to the above points is whether the patient can claim any financial or other interest in, or control over, the exploitation of products derived from research that made use of their materials. If consent forms mention this issue at all, they vary widely in how they cover it.
  3. Should the biobank, in its relationship with the researcher who takes material from the biobank, claim to own those materials? Some do and some don’t. A policy document issue by the UK National Cancer Intelligence Network in June 2009, quoting a recommendation of the Confederation of Cancer Biobanks, suggests that biobanks should waive their IP rights in the materials that they supply to researchers.

noIP is just one of dozens of legal, practical and policy issues that are typically addressed in the documents. It is difficult to know how best to deal with these issues as a researcher or the employer of a researcher. Should one take the terms on offer or try to negotiate them, if only to remove glaring inconsistencies and inappropriate terms? It seems that some biobanks refuse to negotiate the terms of their MTAs, no matter how badly drafted they may be.

Rather than spend a time and money negotiating terms in individual cases, shouldn’t the sector be developing some standard contracts, as has been done for university research contracts (the Lambert agreements) and for clinical trial agreements in NHS hospitals? Although neither of these examples of standard contracts is perfect, at least they provide a way of reducing negotiation time.

 

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