KTI Knowledge Transfer Ireland. Practical Guide Consultancy Agreements

Transcription

1 KTI Knwledge Transfer Ireland Practical Guide Cnsultancy Agreements 1

2 KTI Knwledge Transfer Ireland Frewrd The KTI Practical Guides have been prduced as a resurce fr thse appraching transactins between Irish research perfrming rganisatins (RPOs) 1 and cmmercial cmpanies. Each Practical Guide explains cmmn terms in the agreements and describes the cnsideratins that might apply. The KTI Mdel Agreements cntained in each Practical Guide take accunt f the legal cnstraints upn RPOs when entering int cntracts, as well as the unique nature f RPOs, whse primary purpse is nt-fr-prfit rather than cmmercial. At the same time, the terms f the agreements seek t address the typical cmmercial pririties f cmpanies, e.g. t have access t intellectual prperty rights. The Guides are based n Eurpean best practice. The Practical Guides are ffered as a starting pint fr drafting and discussin, as required. Neither cmpanies nr RPOs are mandated t use the Mdel Agreements. The KTI Practical Guides and Mdel Agreements are available n the KTI website t dwnlad and use direct. Disclaimer Parties shuld take their wn legal advice n the suitability f any mdel agreement fr their individual circumstances and n assciated legal and cmmercial issues. Neither Knwledge Transfer Ireland, Enterprise Ireland nr any f the individuals r rganisatins wh have prduced r cmmented n these dcuments assumes any legal respnsibility r liability t any user f any f these mdel agreements r cmmentaries. The KTI Practical Guides and Mdel Agreements were prepared by Andersn Law LLP (Oxfrd, UK; with advice n certain Irish law issues frm LK Shields Slicitrs (Dublin, Ireland; 1 RPOs are cnsidered t be Higher Educatin Institutes (Universities and Institutes f Technlgy) r State research rganisatins 2

3 KTI Knwledge Transfer Ireland Cntents Frewrd... 2 Intrductin t Cnsultancy Agreements... 4 Mdel Cnsultancy Agreement

4 KTI Knwledge Transfer Ireland Intrductin t Cnsultancy Agreements What is a cnsultancy agreement? A cnsultancy agreement is a cntract under which ne party agrees t prvide advice and ther related services t anther party, usually in return fr a sum f mney. Cnsultancy agreements can be distinguished frm ther types f cntract that an Irish Higher Educatin Institute r State research rganisatin (tgether, RPO ) might enter int as they invlve the RPO prviding specific services t a third party in respect f which there may be a prfit element, in additin t the RPO cvering the csts f ding the wrk. As a result, an RPO is ften willing t agree t terms in a cnsultancy agreement that it may nt agree t in ther types f agreement, such as: agreeing that wnership f intellectual prperty rights generated in the curse f prviding the services are t be wned by the client, ften withut the RPO (r the academic) having any further right t use any f the results generated; giving the client a significant degree f cntrl ver defining the scpe f wrk and the timetable fr perfrmance (in cntrast t an academic-led prject); and agreeing that the results f the wrk will be kept cnfidential, giving the RPO (and the academic) little r n right t publish. What is meant by advice and ther related services in a cnsultancy agreement? The type f advice that wuld be nrmally cvered by a cnsultancy agreement wuld include: prviding an pinin; making a recmmendatin; prviding assistance with slving a technical r factual prblem; making an assessment f a technical r factual situatin; and interpreting facts and situatins using the skills and experience the academic has. The type f ther related services which wuld be smetimes prvided tgether with advice wuld include: making presentatins; and attending cnferences r meetings. Why d RPOs enter int cnsultancy agreements? The knwledge and skills f academics are sme f the main assets f an RPO and are highly valued by cmpanies and ther external rganisatins. Whilst cnsultancy may generate revenue, whether fr the RPO r fr the individual academic, this is rarely the main reasn fr entering int a cnsultancy agreement. Cmmnly encuntered reasns include: increasing the impact f academic research by making the skills and knwledge that an academic has develped available t third parties; develping the skills and knwledge f academic and technical staff and students in the real wrld ; testing ideas, inventins, practices, etc. develped at the RPO; and establishing relatinships with third parties wh may wish t cllabrate n, r fund, future research prjects, studentships, etc. Wh shuld enter int the cnsultancy agreement the RPO r the academic? Bradly speaking, there are tw different appraches t entering int cnsultancy agreements: 1) The RPO cntracts directly with the client Under this arrangement, the RPO accepts the bligatin t prvide the services f ne r mre f its academics t the client. As the cntracting party, all payments are made by the client t the RPO and the RPO will als bear any liability t the client in the event f a failure t perfrm the cntract in accrdance with its terms. 4

5 KTI Knwledge Transfer Ireland Frm the individual academic s perspective, there are a number f benefits t having the RPO cntract directly with the client, e.g.: all the cntract negtiatin and administratin is handled by smene ther than the academic, leaving the academic free t fcus n prviding the cnsultancy services; the academic can rely n the RPO s prfessinal indemnity and ther insurance plicies and des nt have the additinal expense f btaining such insurance separately (which, in certain fields, can be expensive r even unavailable t individuals); the individual academic will nt be cntractually liable t the client; any cntractual liability will fall n the RPO as the cntracting party; the RPO is likely t have mre experience entering int cnsultancy cntracts and can prvide templates, advise n the best way t structure particular deals, and may be able t btain a higher fee by negtiating n behalf f the rganisatin; and the academic will have the benefit f using the name and reputatin f the RPO in perfrming the cnsultancy wrk. 2) The academic cntracts directly with the client. Under this arrangement, the academic agrees t prvide the cnsultancy services in his/her persnal capacity and the RPO wuld nt nrmally be invlved in this arrangement (r derive any direct benefit frm it). Befre entering int any direct cnsultancy agreement, an individual academic shuld: ensure that he/she is permitted under the terms f his/her cntract f emplyment t undertake additinal wrk directly fr third parties; ensure that all incme tax liabilities are accunted fr in respect f any payments received in respect f such cnsultancy wrk; investigate whether any insurance cver is required (such as prfessinal indemnity insurance) and, if s, btain such plicies (nte that by cntracting directly, an individual will nt usually be able t benefit frm the RPO s insurance plicies); and ensure that in perfrming the cnsultancy services, he/she des nt make use f any RPO facilities, equipment r persnnel r use the name f the RPO in any way s as t suggest that the services are being prvided by the RPO (including use f RPO letterhead, RPO intellectual prperty and RPO address). Even where the academic cntracts directly with the client, the RPO may still have an interest in cntrlling the academic s cnsultancy activities, e.g: The RPO may wish t ensure that the academic des nt enter int cmmitments which might adversely affect the RPO - e.g. if the cnsultancy wrk invlves use f backgrund intellectual prperty, creates a cnflict f interest r expses the RPO t adverse publicity r financial risk; The RPO may want t take steps t ensure that the academic des nt make use f the RPO s facilities and/r equipment in prviding any private cnsulting services; and The RPO may want t knw what cnsultancy is being undertaken by an academic in a particular perid in part t ensure that this is within the agreed time allcatin under their cntract but mre imprtantly t be able t capture the value and impact f the academic cmmunity at the RPO. As a result, where academics are entitled t cntract directly with third party clients fr the prvisin f cnsultancy services, best practice shws that many RPOs impse restrictins n their academics ding s by requiring such academics t: ensure that the cnsultancy wrk is dne within a defined number f days per annum; 5

6 KTI Knwledge Transfer Ireland btain the apprval f the academic s head f department befre entering int any cnsultancy agreement r cmmencing wrk; sign an acknwledgment, waiver, agreement r sme ther similar dcument stating that the academic will nt access r use any internal resurces f the RPO, and that the academic is prviding services t the client utside his/her rle as an emplyee f the RPO; and cnfirm that in prviding such cnsultancy services t the client, they will nt be in breach f any cnflicts f interest plicy. Frm the academic s perspective, the advantages f entering int a cnsultancy agreement directly with the client are typically as fllws: the academic may have mre cntrl ver the cntracting prcess including timelines and limitatins which wuld be impsed under the cntracts plicy f the RPO as t what terms can be accepted; and the academic will be entitled t retain the whle fee paid by the client. Of curse this pre-suppses that the academic is experienced in the drafting, interpretatin and negtiatin f cntracts and/r has recurse t legal advice. The Mdel Cnsultancy Agreement deals nly with the case f RPO cnsultancy cntracts. Persnal cnsultancy cntracts are nt the subject f advice frm KTI. Hwever sme f the principles in this Practical Guide are useful in respect f bth types f arrangement. Why is a written cnsultancy agreement necessary? The advantages f entering int a written cnsultancy agreement are as fllws: Limiting liability. The cnsultant (i.e. the RPO r the individual, depending n the cntracting party) can set ut the level and type f liability it is willing t accept in respect f the perfrmance f the services. Nte that withut wrding t limit liability, the cntracting party culd face unlimited liability if the advice prvided by the academic r the RPO turned ut t be bad, was carried ut negligently r did nt meet an acceptable r agreed standard. Setting standards f perfrmance. A written cntract will nrmally include details as t what type f assurances are given by the cntracting party as t the quality f the wrk etc. In cntrast t academic research cllabratin agreements where results are ften prvided as is, the cnsulting party may be required t give assurances that the results are accurate, free frm defects, have nt been cpied, d nt incrprate any third party materials, etc. The effect f giving any such assurances is that the client will have the right t sue the cntracting party fr damages if it fails t meet these standards. Assigning arising IP. If intellectual prperty arising during the cnsultancy prject is t be wned by the client, this can be cvered in the written agreement (nte that, if intellectual prperty is t be assigned t the client, the client will nrmally insist n a written cntract as wnership f intellectual prperty can nly be assigned by an agreement in writing). Licensing backgrund IP. If either party is t prvide access t its backgrund intellectual prperty, whether fr the purpses f carrying ut the services, r therwise, the scpe f the licences t use such backgrund intellectual prperty can be prperly defined. Nte that where an academic enters int a persnal cnsultancy cntract, he/she will nt be entitled t grant a licence t backgrund intellectual prperty wned by the RPO. Nte that the Mdel Cnsultancy Agreement that accmpanies this Practical Guide assumes that n licences t backgrund intellectual prperty are being prvided. Defining the scpe f wrk. The scpe f the services can be prperly defined this can include nt just a detailed descriptin f the wrk t be perfrmed, but may als include limits n the maximum time that the cnsultant is expected t wrk n the prject, etc. Cnfirming relevant dates. The parties can clearly set ut any relevant dates fr perfrmance, delivery, payment, etc. Additinal cnsideratins fr special types f academic cnsultancy agreements In additin t the usual cnsultancy arrangements with cmpanies and public/charitable sectr rganisatins, there are tw types f cnsultancy agreement that are ften seen in an academic 6

7 KTI Knwledge Transfer Ireland cntext that may require special cnsideratin. These are when an academic is t prvide cnsultancy services t a spin-ut cmpany and where an academic is engaged t act as an expert in a dispute between tw parties. Cnsultancy agreement fr a spin-ut cmpany. Where technlgy is spun-ut f an RPO, the academic wh created r invented the technlgy will ften cntinue t be invlved in the further develpment f the technlgy (as well as prviding such ther services) under the terms f a cnsultancy agreement with the spin-ut cmpany. Typically, the cntract used fr this type f cnsultancy is reasnably similar t a cntract whereby the academic cntracts directly with the client, but it is als pssible fr this cntract t be entered int with the RPO as the cntracting entity. Where cnsultancy services are being prvided t a spin-ut cmpany, it is nrmal t have sme prvisins in the cntract clarifying t what extent the academic will be entitled t cntinue t research in the area f technlgy and publish any results. The RPO (and the academic) will als be keen t establish hw much time the academic is expected t spend in prviding such cnsultancy services. On the ther side f the transactin, the spin-ut cmpany may request sme restrictins n wh the academic can wrk with in the future (e.g. a prhibitin n prviding cnsultancy t, r wrking n prjects funded by, cmpetitrs f the spin-ut cmpany). Any such restrictins need t be cnsidered carefully as they may impact n the individual s academic freedm and als their ability t generate future funding fr research. Even if acceptable in principle, detailed emplyment law advice shuld be taken t ensure that such terms are apprpriate. Expert witness agreement. Under an expert witness agreement, an academic is nrmally cntracted t prvide an bjective pinin (and usually a written reprt) in relatin t a legal dispute. He r she will ften be required t carry ut analysis and testing n which such pinin will be based. In additin t carrying ut analysis and prviding an pinin and/r reprt, if the ther parties d nt agree the pinin r reprt f the academic (r any part f it), the academic may be required t attend curt as an expert witness fr examinatin and crss-examinatin. An agreement t prvide services as an expert witness is nrmally entered int with the firm f slicitrs fr a particular party. Smetimes, experts are appinted by the curt itself rather than by ne f the parties. Unlike ther types f cnsultancy, expert witnesses are usually required t fllw rules prescribed by the relevant curts and are required t meet certain standards as laid dwn by thse curt rules; accrdingly, the expert witness agreement shuld make it clear that these bligatins verride any bligatins f the cnsultant t the client. Negtiating expert witness agreements ften invlves less fcus n wnership f arising intellectual prperty, althugh the cnfidentiality prvisins in an expert witness agreement are ften strnger than might be encuntered in a regular cnsulting agreement (with the caveat that the cnfidentiality bligatins shuld nt prevent the expert frm perfrming its duty t the relevant curt). It is usual that expert witness cnsultancy is by way f persnal arrangement and nt a cntract with the RPO. RPO-client cnsultancy agreements - wh shuld draft the cnsultancy agreement? There is n set rule, but many RPOs wish t enter int a cnsultancy agreement based n their standard terms and cnditins (see the Mdel Cnsultancy Agreement that accmpanies this Practical Guide fr an example). This is especially true fr rutine, small-scale cnsultancy wrk, where the wrk invlved may nly take a few hurs and fee will be relatively small. Indeed, fr very rutine and small-scale wrk, many RPOs will frmat the cnsultancy agreement as a letter agreement which is ften viewed as being a mre friendly frmat. 7

8 KTI Knwledge Transfer Ireland Sme clients state that they have a plicy that they will nly enter int agreements based n their wn standard terms and cnditins, r n terms and cnditins cntained in a purchase rder. Althugh it is hard t generalise, such terms and cnditins may include prvisins that are unacceptable t the RPO r may be cmpletely silent n issues that are imprtant t the RPO (particularly in the areas f intellectual prperty, warranties and limitatin f liability). Smetimes, the client s terms and cnditins are excessively detailed (cntaining many prvisins which are nt f direct relevance t the cnsultancy services r which seek t cver every remte eventuality) and the RPOs are ften faced with difficult chices f deciding which issues t push back n, the management time required t agree terms and whether the cst f legal services required t address cncerns is justified. Key terms in a typical cnsultancy agreement with an RPO Mst prvisins encuntered in cnsultancy agreements are fairly standardised, even if the precise wrding used may differ. The areas that are subject t negtiatin typically include ne r mre f the fllwing: Timescales. Timescales fr perfrmance and delivery shuld be clearly set ut in the cnsultancy agreement and the RPO shuld ensure that it is cnfident it can meet such timescales. Care shuld be taken ver any prvisins that state that time is f the essence, as a failure t meet the relevant timescales will allw the ther party t immediately terminate the agreement (in additin t its right t claim damages). Obligatin t achieve a particular result. Mst cnsultancy agreements entered int by an RPO will include a prvisin stating that n guarantees are given that any particular result will be achieved. What the cnsultant is effectively prmising is that they will carry ut the services prperly, but they cannt be held respnsible if the result is nt as expected r hped. Standard f service. Mst cnsultancy agreements will include an bligatin n the cnsultant t use reasnable care and skill in perfrming the services; indeed, if the agreement is silent n this pint, such an bligatin may be implied int the cntract by law. Althugh it is pssible t state in a cnsultancy agreement that the cnsultant is under n bligatin t use reasnable care and skill in perfrming services, this raises the questin as t why any client wuld wish t prcure services frm an rganisatin which is nt prepared t prmise that the wrk will be perfrmed cmpetently. The suggested way t deal with such matters is t expressly include the bligatin, but use the liability sectin t limit liability fr breach f this bligatin. Intellectual prperty Fregrund IP. Typically, where the client is paying cmmercial rates fr cnsultancy (i.e. the RPO is making a prfit in additin t cvering its csts), the client will expect t wn any intellectual prperty ( IP ) that is generated in the perfrmance f the services ( Fregrund IP ). Care shuld be taken, hwever, abut hw this is phrased in the agreement t ensure Fregrund IP is limited t IP that is generated by the cnsultant in the perfrmance f the cnsultancy services. Intellectual prperty Backgrund IP. Clients will ften request rights in and t the RPO s preexisting intellectual prperty r intellectual prperty generated independently f the cnsultancy wrk ( Backgrund IP ), ften n the basis that such IP might be needed in rder t explit the Fregrund IP. Such prvisins are likely t be unnecessary fr the rutine prvisin f advice and tend t be seen in agreements where the intent f the cnsultancy is t generate intellectual prperty that will be cmmercially explited. Where a client genuinely needs access t an RPO s Backgrund IP in rder t explit Fregrund IP, then this is nrmally licensed as part f a separate agreement (r at least additinal payments are requested fr the use f such Backgrund IP). Any licensing f Backgrund IP shuld ensure that the Backgrund IP has been specifically identified (nt just any Backgrund IP that the client might need ) and that the scpe f the licence can be clearly set ut (e.g. can the licensee use the Backgrund IP cmmercially, can it grant sub-licences, is use limited t a particular field, etc.). Publicatin. Cnsultancy agreements d nt nrmally permit the cnsultant t publish the results f the wrk, but depending n the nature f the wrk, sme limited right t publish, perhaps in annymised frmat, may be acceptable t the client. If publicatin is t be permitted, wrding can be added t the cnsultancy agreement t give the client the pprtunity t review prir t publicatin and t remve references t the client s cnfidential infrmatin. 8

9 KTI Knwledge Transfer Ireland Warranties. A warranty is a cntractual prmise r statement, breach f which will entitle the ther party t claim damages. Care shuld be taken by RPOs when being asked t give warranties, as they are ften inapprpriate and/r are ver and abve the risks that the RPO is willing t accept. Of particular cncern are likely t be: Warranties as t nn-infringement f third party rights - the creatin f intellectual prperty is nt, nrmally, the primary fcus f the cnsultancy wrk and usually n analysis r due diligence will be undertaken as t what RPO intellectual prperty will be used, nr as t whether third parties might already have patents, etc that relate t the results f the services. Rather, the results f the services are ften prvided withut such warranties and with the use f such results being at the risk f the client (wh can cnduct freedm t perate searches themselves if need be). Warranties t use best effrts r best endeavurs These are generally unacceptable because the standard being expected is very high and may require that ther wrk f the academic (and pssibly wrk in ther parts f the RPO) t be set aside just t ensure that the services have been cmpleted. Warranties that a particular result will be achieved See the discussin abve under the heading Obligatin t achieve a particular result. Where it is nt pssible t remve a warranty, it is smetimes pssible t limit its scpe t a knwledge-based warranty fr example the RPO warrants that as far as it is aware, but withut having cnducted any searches r investigatins, it has btained all necessary and required licences, and cnsents and permits t perfrm the cnsultancy services. Indeed, such warranties are smetimes given as t the knwledge f particular named individuals which avids the risk that smene in anther part f the RPO might be aware f an issue that the cnsultant and the cntracts team have nt been infrmed f. The inclusin f the wrding but withut having cnducted any searches r investigatins helps t avid any implicatin that the RPO is under a duty t take steps t verify this fact. Liability. It is fairly rutine in cmmercial cntracts fr ne party t try t exclude and/r limit its liability as much as pssible, whilst at the same time trying t expse the ther party t as much liability as pssible. In terms f limitatins f liability, the party prviding the cnsultancy services will nrmally want t exclude liability fr certain types f lss (e.g. lss f prfits, lss f cntracts, lss f revenue, lss f data, lss f pprtunity, indirect / cnsequential lsses, etc.) and, t the extent that there is any ther direct liability arising, t cap its liability t a particular amunt (which may be expressed as a fixed sum, r by reference t the cntract price). Many insurance plicies will require the RPO t ensure that such liability limits are included in cntracts in rder fr the plicy t cver liability arising ut f them. Where an extremely high cap n liability is being sught by the client, it is ften useful t ask why such a high liability cap is required fr the particular piece f wrk in questin ften, these figures will cme frm standard template language and may nt be apprpriate fr the wrk envisaged. If the client insists n a high liability cap, it is als wrth investigating whether specific insurance can be taken ut and, if s, adding this premium t the cntract price. This mves the discussin away frm being ne f whether the RPO takes respnsibility fr its actin, t a simple risk/reward assessment. Care shuld als be taken whenever the RPO is asked t prvide an indemnity t the client. Three types f indemnity are cmmnly requested by clients: (i) indemnities against third party claims; (ii) indemnities against breaches f cntract r nn-perfrmance; and (iii) indemnities against emplyment claims by the individual wh will perfrm the cnsultancy. In regard t (i), the indemnity fr lsses arising ut f third party claims will nrmally be irrespective f fault and s the RPO shuld cnsider carefully whether it is apprpriate fr it t be accepting liability fr claims that might be made against the client by third parties r whether this is mre f a cmmercial r peratinal risk that shuld be brne by the client. Where the indemnity is fr breach r nnperfrmance, i.e. (ii), the effect f this is t create a separately enfrceable actin (i.e. ver and abve the claim fr breach f cntract) and, in sme cases, this can result in the indemnified party 9

10 KTI Knwledge Transfer Ireland being able t recver sums that it wuld nt be able t recver under a breach f cntract actin. Such indemnities shuld, therefre, generally be avided by RPOs. In regard t (iii), it is nt uncmmn fr a party t request an indemnity t cver ff the issue f the cnsultant's emplyment relatinship with the RPO; smetimes a party will request indemnity cver frm the emplyer rganisatin t cver csts r damages arising frm a claim f emplyment made by the cnsultant against the recipient f the cnsultancy services. Overly nerus bligatins. Other clauses that may require particular attentin, and which RPOs typically resist, are where the client pushes fr verly nerus requirements n the cntracting party such as: bligatins n the cnsultant t attend numerus meetings abut the prgress f the wrk, ften with requirements t travel t the client s premises; bligatins t prvide numerus reprts, with verbearing requirements as t the number f cpies and the frmat f the reprts; a requirement that the academic (r smetimes the RPO as a whle) des nt undertake any wrk fr ther cmpanies, either during r fllwing terminatin f the cnsultancy wrk fr the client; and a requirement that impses pre-determined financial penalties n the RPO (e.g. liquidated damages r penalty clauses fr late delivery). Issues t cnsider The fllwing is a list f sme issues t cnsider when reviewing a cnsultancy agreement: Templates. Use f the Mdel Cnsultancy Agreement will speed up negtiatins and allw a cntract t be cncluded as swiftly as pssible. Parties. Is the agreement clear as t whether the cnsultancy agreement is being entered int by the RPO r by the cnsultant in his/her persnal capacity? Terms: Payment terms. Are the payment terms clear and is the price crrect? Scpe f wrk. Is the scpe f wrk clearly defined? Are there limits n hw much time the academic is expected t spend n the prject? Intellectual prperty. If Fregrund IP is t be assigned t the client, is the academic cmfrtable with this and shuld there be a licence back fr teaching / research purpses? Cnfidentiality / Publicatin. Is the academic happy t cmply with the cnfidentiality bligatins and/r des the academic need the right t publish sme f the results f the cnsultancy r use the results in his/her research? Liability. If the cnsultancy services are nt perfrmed prperly (r at all) what is the RPO s expsure and hw can this be limited? Mnitring. The RPO will implement prcedures t mnitr any bligatins cntained in a cnsultancy agreement, including maintaining a database f cnsultancy agreements entered int. Gverning law. It is expected that Irish RPO agreements will be gverned by Irish law and subject t the jurisdictin f the curts f the Republic f Ireland. Imprtant pints t nte abut the Mdel Cnsultancy Agreement The reader faced with drafting a cnsultancy agreement must always keep in mind that a template can nly ever be a starting pint. The specific circumstances f the particular arrangement must always be cnsidered and the template tailred as apprpriate. Fr example, a number f fact specific, cmplex issues may be raised when drafting a cnsultancy agreement, which by their nature cannt be dealt with in a template. Examples f these issues include the fllwing: The Mdel Cnsultancy Agreement has nt been drafted t take accunt f the individual requirements f Irish third level educatinal institutins which might apply. The reader is advised t seek ut and address, by additinal prvisins, any peculiarities r requirements f a relevant institutin. The Mdel Cnsultancy Agreement has nt been drafted with regard t any tax law, treatment r plicy. It may be advisable t get specific tax advice in relatin t any tax issue r treatment 10

11 KTI Knwledge Transfer Ireland which might arise as a result f perfrming r implementing the agreement. Tax treatment will depend in part n the parties circumstances at the time the agreement is made and thereafter. The Mdel Cnsultancy Agreement has nt been drafted t be used by r in relatin t cnsumers. Cntracts cncluded with cnsumers are bliged t include an additinal layer f legal prtectins, t be written in plain-spken language, and t cntain ther features impsed by cnsumer-specific laws which are beynd the scpe f this Practical Guide. In additin, the reader shuld be aware that in sme situatins the law relating t state aid might need t be cnsidered (e.g. if the industrial party t the cnsultancy agreement des nt pay market value fr the benefits it receives). This is a cmplex area and there is n ne-sizefits-all way f dealing with it. Accrdingly, the reader shuld seek specialist advice when required. 11

12 KTI Knwledge Transfer Ireland Checklist f preliminary issues and prvisins cmmnly fund in RPO cnsultancy agreements The checklist prvided belw lists (i) sme preliminary pints that may need cnsideratin, and (ii) the main clauses usually fund in a cnsultancy agreement tgether with the main issues that shuld be addressed regarding each prvisin. Preliminary Parties Is the cnsultancy agreement between the RPO and the client r between the academic and the client? Are the parties t the cnsultancy agreement crrectly described have their full legal names and fficial addresses been included? Where the agreement is between the RPO and the client shuld the academic sign t indicate that he/she has read and understd the prvisins f the cnsultancy agreement? Authrised signatry Des the cnsultancy agreement need t be signed by a particular persn r in a particular department? Are the authrised signatries crrect fr each party? Apprvals, etc. Have varius apprvals/cnfirmatins been btained (head f department, ethics apprvals, cnfirmatin that n cnflicts f interest exist, etc.). Access t resurces r Backgrund IP If these are required, have these been clearly identified and is there a prcedure fr negtiating an agreement t prvide/license these? Has a check been carried ut as t whether there will be any use f Backgrund IP? Wrk t be dne Has this been dcumented by the client r the academic, including any advice that is t be given? Has a wrk schedule been drafted in sufficient detail t describe the wrk, timelines and deliverables upn which the cntract (and pricing) will be based? And has it been agreed between the parties (including the academic)? Des the wrk fall int any high risk categries requiring different wrding r a different type f agreement (wrk n humans, animals r with sensitive r dangerus materials)? Cntract terms Date The date f the cnsultancy agreement is fund in the signature blck n the first page f the cnsultancy agreement; the date f the cnsultancy agreement is the date n which the last party signs the cnsultancy agreement. The date the last party signs the cnsultancy agreement may, hwever, be different t the date when the academic starts t prvide advice under the cnsultancy agreement - this is typically addressed by having a definitin f Cmmencement Date in the cnsultancy agreement. Definitins Backgrund and Fregrund IP Where Backgrund IP is defined, des the definitin adequately capture the type f existing intellectual prperty which is likely t be used by the parties in the cnsultancy prject? Generally, is there a clear distinctin between IP generated in the curse f the cnsultancy prject and IP generated utside the prject (whether befre r during the term f the prject)? 12

13 KTI Knwledge Transfer Ireland If Fregrund IP is t be wned by the client, is it clearly limited t a specific technical area r field? NB detailed IP issues are referred t later in this table. Cnsultant Identificatin The academic wh is t prvide the advice shuld be named tgether with the department, sectin and jb details. Scpe f wrk Is there an apprpriately precise descriptin f the services that the Cnsultant will be prviding? Is it made clear that his/her services are nt being prvided n an exclusive r full-time basis? Is it clear that the cnsultant will nly be prviding services in relatin t a specific prject? Is the prgramme f wrk drafted in sufficient detail t describe the wrk, timelines and deliverables and rles f the parties? Is the agreed prgramme f wrk attached as a schedule t the agreement? Status Has the Cnsultant s status been specified in relatin t the cnsultancy agreement, i.e. acting as an emplyee f the RPO (with the RPO as the cntracting party)? Availability What is t happen if the Cnsultant is nt available (e.g. due t illness)? Des the RPO have a right t replace the Cnsultant with anther individual? Are there limits t the times when the Cnsultant will be made available (e.g. maximum number f days per mnth, n mre than x days cnsecutively, etc). Is travel and payment and reimbursement fr travel by the cnsultancy adequately cvered? Effrt Is the amunt f effrt t be made by the academic and RPO t be ther than reasnable endeavurs ; What des the amunt f effrt relate t: the standard f the wrk, the results t be achieved, when it will be cmpleted? Is the RPO willing t accept these cmmitments? Duratin and Terminatin Cmmencement /Cmpletin Date The Cmmencement Date that is inserted shuld be the date that wrk is actually t cmmence, nt the date when the cnsultancy agreement is signed. If a date is given fr when the wrk will be cmpleted, what happens if the academic des nt cmplete giving the advice by that date? Is the RPO liable fr breach? Des the RPO need a mechanism in place which allws the RPO t infrm the client that the Cmpletin Date cannt be met and t stp wrk until a new date is agreed? Right t terminate Will the agreement terminate autmatically r n ntice (subject t the client paying utstanding sums)? Will the client r RPO have the right t terminate early fr cnvenience? Will the client r the RPO have the right t terminate fr breach r inslvency? In the case f a breach that is capable f being remedied, is the defaulting party t be given a cure perid befre terminatin is effective? 13

14 KTI Knwledge Transfer Ireland What is t happen when the agreement terminates? Return f materials / infrmatin, etc? Price and payment Setting the price Has the apprpriate price calculatin methd been determined (fixed, by the hur, by the day etc)? Payment terms When can invices be raised by the RPO? n signature f the cnsultancy agreement? in advance f perfrming the wrk? after all the advice has been prvided? when sme result has been achieved (milestne)? Expenses Are the fees inclusive r exclusive f expenses incurred by the Cnsultant? Are there any limits n the type f expenses r the amunt? Are the expenses t be paid at the same time and in the same way as the price? Is any dcumentary prf required t be prvided f any expenses? Other If calculatins are based n a day r ther fixed perid, is there a definitin f what is paid fr part-units (e.g. hurs)? If the client prvides instructins (r des nt prvide instructins) which result in delay in undertaking the advice r there is a change in the advice that is t be prvided, can the RPO charge fr this? Unless the fees quted are expressed t be exclusive f any VAT which may be payable they will be treated as including VAT. It is advisable t clarify whether the fees r expenses are exclusive r inclusive f VAT even if the Cnsultant is nt yet registered fr VAT at the time the agreement is signed as this may change at a later date. It shuld be nted that VAT is chargeable where the cnsultant is nt registered but is required t be registered, usually because the VAT registratin threshld has unknwingly been (r is abut t be) exceeded. Cnfidentiality One-way r twway? Types f cnfidential infrmatin Visits t RPO premises Are visits permitted? Des the cnsultancy agreement include suitable cnfidentiality prvisins? D these prvisins sufficient prtect the RPO s interests? Is it likely that any cnfidential infrmatin is t be disclsed by the academic? Is this infrmatin sensitive r valuable? Has a check been carried ut t ensure that such disclsures will nt affect any (ptential) patent applicatins? Is there a perid by which cnfidentiality will survive terminatin? Is the perid lng/shrt enugh? Are client visits apprpriate fr this cnsultancy ffering? Is the client allwed t make visits t the RPO s premises? Can the client have a third party visit in its place? If visits are permitted, are there any cnditins attached t such visits? Permitted times when can the client make a visit? Only when prir written ntice has been given? Only when mutually agreed between the parties? 14

15 KTI Knwledge Transfer Ireland When sme stage has ccurred in the advice being given? Purpse f visits Is the purpse f the visit clear and specific (e.g. inspect the prgress f the Prject )? Des it include access t financial recrds, etc.? Are there any standards t be met r criteria t be met during the visit? Are there t be any cnsequences if the client des nt find the visit satisfactry? Prperty Is any prvided? Will the client be prviding any equipment, hardware, cmputers, sftware, etc. fr the Cnsultant t carry ut the advice. What is prvided? Is it necessary t specify the equipment that is being prvided, i.e. is what being prvided especially valuable, fragile r imprtant t the agreement that it needs t be identified particularly? If equipment is t be identified, have details been lgged in a separate schedule (i.e. descriptin, serial number(s), date f delivery, value)? Cnsequences Is wnership f the prperty dealt with, i.e. is the equipment t remain the prperty f the client when the agreement is terminated r is the RPO t becme the wner? On terminatin, des the equipment need t be returned t the client? Wh is pay fr de-cmmissining and transprt? Is there exclusin f liability fr lss, damage r destructin f the equipment n the part f the RPO? Is the RPO t be respnsible fr damage if caused by its negligence (and this subject t any limits)? Ownership f IP Backgrund IP Is Backgrund IP being prvided by either party (nte that the Mdel Cnsultancy Agreement that accmpanies this Practical Guide assumes that there will nt be any Backgrund IP being prvided). If Backgrund IP is t be prvided, is it clearly identified and is the agreement clear that it remains the prperty f the party wh wns r has rights t it? If a licence t use Backgrund IP is being granted, is the scpe f this clearly defined i.e. what the Backgrund IP can be used fr, the duratin f the licence, whether it can be sub-licensed t third parties, etc. Fregrund IP Is the Fregrund IP t belng t the client? Is the RPO required t disclse Fregrund IP generated by the academic t the client? When it is required t d this? On creatin, prmptly, within a reasnable time, nt specifically specified? Warranties Warranties What warranties (if any) is the RPO prepared t ffer in regard t the advice prvided by the academic? Shuld the RPO be prepared t ffer anything higher than an assurance that it will use reasnable effrts t perfrm the wrk? Is it prepared t give an assurance that it will carry ut the wrk with reasnable care and skill? Des the cnsultancy agreement clearly state that the RPO/academic is NOT warranting r giving any ther assurance that any result r bjective will be achieved r that any time limit will be met? What are the cnsequences f Des the RPO have the right t re-perfrm the services? 15

16 KTI Knwledge Transfer Ireland a breach any warranty given? Liability Limitatin / Exclusin f liability Shuld the RPO refund fees, ffer sme cmpensatin r d sme extra r different wrk? Shuld the parties meet and agree what needs t be dne? Shuld any remedy be limited t a sum, such as the value f the cntract, r be related in sme way t the insurance the RPO has? Is there an verall cap n liability under and in cnnectin with the cnsultancy agreement? Are there any types f liability that shuld nt be subject t the cap r exclusins (e.g. breach f data prtectin laws, etc)? Are particular types f lss excluded (e.g. lss f prfits, lss f cntracts, lss f revenue, lss f data, lss f pprtunity, indirect / cnsequential lsses, etc.)? Is there a carve ut t ensure that liability is nt being limited where it cannt be under applicable law? D the liability limits and exclusins apply t bth parties? Indemnities Is the RPO being asked t give any indemnities? Des the RPO require any indemnities frm the client? If s, are these limited t indemnities cvering lsses arising frm third party claims? Is the indemnifying party able and willing t take the cmmercial risk cvered by the indemnity? Des the indemnifying party have the assets t back up any liability r is it cvered by an apprpriate insurance plicy? Is liability under the indemnity cvered by any liability cap? Is the indemnity subject t any cnditins, e.g.: the indemnified party gives the indemnifying party giving prmpt ntice f a claim; the indemnified party nt admitting liability in respect f a third party claim; the indemnified party allwing the indemnifying party t cnduct any defence f a third party claim; and/r the indemnified party prviding all necessary assistance and dcumentatin t the indemnifying party in cnnectin with any defence. Bilerplate Law and jurisdictin Des the cnsultancy agreement state which law and jurisdictin shuld apply t it? If fr any reasn the law is nt that f the Republic f Ireland, why nt, is this necessary? And des the chsen law and jurisdictin cmply with the RPO s insurance plicies and internal plicies? 16

17 KTI Knwledge Transfer Ireland Mdel Cnsultancy Agreement 17

18 Subject t Cntract / Cntract Denied KTI Knwledge Transfer Ireland Dated 20[ ] (1) [Full legal name f the RPO] and (2) [Full legal name f the Client] MODEL CONSULTANCY AGREEMENT 18

19 Subject t Cntract / Cntract Denied KTI Knwledge Transfer Ireland i ii iii iv v CONSULTANCY AGREEMENT This Agreement dated 20[ ] vi is between: (1) [ ] (the RPO ), [an academic institutin incrprated r established under [statute r charter in Ireland],] whse [principal address r registered ffice] is at [ ] vii ; and (2) [ ] (the Client ), [a cmpany r insert relevant entity type viii incrprated in [ ] under registratin number [ ],] whse [principal place f business r registered ffice] is at [ ] ix. Backgrund: The Client is engaged in the research and develpment f [ ]. The RPO has expertise in the field f [ ]. The Client wishes t engage the RPO t prvide the Services in cnnectin with [ ], all subject t the prvisins f this Agreement. The Parties agree as fllws: 1. Definitins 1.1 Definitins. In this Agreement, the fllwing wrds shall have the fllwing meanings: Affiliate Claims In relatin t a Party, means any entity r persn that Cntrls, is Cntrlled by, r is under cmmn Cntrl with that Party. All demands, claims and liability (whether criminal r civil, in cntract, trt (including negligence) r therwise) fr lsses, damages, legal csts and ther expenses f any nature whatsever and all csts and expenses (including legal csts) incurred in cnnectin therewith. Cmmencement Date The cmmencement date as set ut in Schedule 1. Cmpletin Date The cmpletin date as set ut in Schedule 1. Cnfidential Infrmatin Cnsultant All technical r cmmercial infrmatin that: (i) in respect f infrmatin prvided in dcumentary frm r by way f a mdel r in ther tangible frm, at the time f prvisin is marked r therwise designated t shw expressly r by necessary implicatin that it is imparted in cnfidence; (ii) in respect f infrmatin that is imparted rally, any infrmatin that the Disclsing Party r its representatives infrmed the Receiving Party at the time f disclsure was imparted in cnfidence; and (iii) any cpy f any f the freging x. The individual(s) identified in Schedule 1 wh will perfrm the Services n behalf f the RPO r such ther persns as may be appinted in accrdance with Clause

20 Subject t Cntract / Cntract Denied KTI Knwledge Transfer Ireland Cntrl Fees Fregrund IP Intellectual Prperty Parties Services Direct r indirect beneficial wnership f 50% (r, utside a Party s hme territry, such lesser percentage as is the maximum, permitted level f freign investment) r mre f the share capital, stck r ther participating interest carrying the right t vte r t distributin f prfits f that Party, as the case may be. The fees t be paid t the RPO by the Client as set ut in Schedule 2. All Intellectual Prperty generated by the RPO in the perfrmance f the Services. All intellectual prperty f any descriptin including cpyright, trade marks, database rights, design rights, patents, utility mdels, and applicatins fr, and the right t apply fr any f the freging items. The RPO and the Client, and Party shall mean either f them. The services t be prvided by the RPO fr the Client as mre fully described in Schedule 1 xi. 2. Cnsultancy services 2.1 Services. In cnsideratin f the payment f the Fees by the Client t the RPO, the RPO shall prvide the Services t the Client frm the Cmmencement Date, all in accrdance with the prvisins f this Agreement. 2.2 Cnsultant. The Services will be perfrmed by the RPO thrugh the Cnsultant. The RPO may, at any time thrughut the term f this Agreement, substitute any Cnsultant with an alternative Cnsultant with similar qualificatins and experience n the same terms as set ut in the Agreement. Unless therwise agreed by the Parties in writing, a change in the named Cnsultant will nt incur a change in the Fees. 2.3 Timetable. Where Schedule 1 states that Services are t be perfrmed within a specific timeframe, then the RPO shall use reasnable effrts t perfrm the Services by the relevant date. Where Schedule 1 des nt require that Services are t be perfrmed within a specific timeframe, then the RPO shall nnetheless use reasnable effrts t perfrm the Services in a timely manner. Time fr perfrmance f the Services shall nt be f the essence. 2.4 Delays. If the RPO fresees any ptential delays in the cmpletin f the Services, the RPO will ntify the Client as sn as is reasnably practicable and take reasnable steps t mitigate any delay t the Cmpletin Date. 2.5 Reprts. The RPO will prvide reprts t the Client at the times and in the frmat specified in Schedule 1. If n times are specified in Schedule 1, the RPO will prvide a reprt t the RPO within a reasnable time fllwing cmpletin f the Services and fllwing the receipt by the RPO f all Fees due under this Agreement xii. 2.6 Independent cntractrs. The relatinship f the RPO t the Client shall be that f independent cntractr. This Agreement is nt intended t, and des nt, create any cntract f emplyment r ther legal relatinship between the Client and any Cnsultant. 3. Fees 3.1 Invices. The RPO shall prvide the Client with invices fr the Fees due t the RPO in accrdance with the payment milestnes set ut in Schedule 2. In the absence f payment 20

21 Subject t Cntract / Cntract Denied KTI Knwledge Transfer Ireland milestnes set ut in Schedule 2, the RPO shall prvide the Client with invices mnthly in arrears fr Fees due in respect f Services delivered. 3.2 Payment. The Client shall pay all valid invices within thirty (30) days f receipt. 3.3 Daily rate. Where Fees are quted n a daily rate basis, a day shall mean up t seven (7) hurs wrk. Any hurs wrked beynd seven (7) hurs in a day shall be charged pr-rata t the Client. 3.4 Expenses. Unless therwise stated in Schedule 2, the Fees are exclusive f all expenses reasnably incurred by the RPO in the perfrmance f the Services and the RPO shall invice the Client fr the reimbursement f the same in additin t the Fees. 3.5 Currency and VAT. All amunts stated are t be paid in Eur and are exclusive f Value Added Tax which, subject t the prvisin f a valid Value Added Tax invice, shall be paid by the Client in additin. 4. Client s bligatins 4.1 Prvisin f facilities, infrmatin, etc. by the Client. During the term f this Agreement, the Client shall, and shall ensure that its staff and agents: (a) (b) (c) c-perate with and assist the RPO, as the RPO reasnably requires; prvide all infrmatin and dcumentatin that the RPO reasnably requires; and make available t the RPO such facilities as the RPO reasnably requires. 5. Intellectual Prperty 5.1 Fregrund IP. All Fregrund IP shall be the sle prperty f the Client. At the request and expense f the Client, the RPO shall execute such dcuments as may be necessary t transfer title t and apply fr patents r ther prtectins fr such Fregrund IP. All Fregrund IP shall be treated as Cnfidential Infrmatin belnging t the Client. xiii 6. Cnfidentiality 6.1 Cnfidentiality bligatins. Each Party (the Receiving Party ) undertakes frm the Cmmencement Date: (a) (b) (c) (d) t maintain as secret and cnfidential all Cnfidential Infrmatin btained directly r indirectly frm the ther Party (the Disclsing Party ) in the curse f r in anticipatin f this Agreement and t respect the Disclsing Party s rights therein; t use such Cnfidential Infrmatin nly fr the purpses f this Agreement; t disclse such Cnfidential Infrmatin nly t thse f its emplyees, cntractrs and sub-licensees pursuant t this Agreement (if any) t whm and t the extent that such disclsure is reasnably necessary fr the purpses f this Agreement; and t ensure that all thse t whm disclsure f r access t such Cnfidential Infrmatin has been given, including its fficers, directrs, emplyees and prfessinal advisers, cmply with the prvisins f this Agreement, and the Receiving Party shall be liable t the Disclsing Party fr any breach f this Agreement by any f the freging. 21