Negotiation Tips: Software Licensing or Development

Negotiation Tips: Generally IPR Owners should take:-

Software Licensing Agreement

1. Escrow arrangement will hold valid if the payment under the license agreement and subsequent maintenance agreement is made in full and on time.
2. If Affiliates or Subsidiaries if are to enjoy the benefits of the Licensing rights then the interpretation shall only limit to existing Affiliates or subsidiaries which are present at the time of execution of this licensing agreement and fall within the ambit of the respective definitions.
3. In the events where escrow materials are to be handed over due to stoppage of support, post the life cycle published for that version of software or in absence of no life cycle published then 5 years, the written down depreciation value of the source code will be transfer value or shareable value to handover the escrow materials for internal use only i.e. no commercial use to gain profits (or even deferred profits) by selling or sharing the source code with any person for whatever reason. Hence the cost of escrow material is to be determined in the escrow arrangement and this cost is not the cost of source code but access rights to the source code for internal development and maintenance purpose only.

In customization of software or interface development or development from scratch (inputs exclusively from customer)

1. For the customer exclusively (like Bespoke), the IPR shall will owned by the customer but IPR Owner shall have restricting rights to allow the use of the software by the customer unless and until payment is paid in full.
2. In the events where source code is to be provided when software is live, the handover shall not restrict us to develop any similar or same type of software or module or interface for any customer if the same is made without using the same code or independently developed to suit the customer requirements or IPR Owner has not done breach of confidentiality agreed under this agreement.
3. It is mandatory for execution of Business Process Study and Gap Analysis by both the parties to freeze the scope of deliverables under customization agreement. In event of dispute of timeline delays and in absence of such documents, the contract shall be evaluated on time and effort basis by having a panel of 3 members ("BenchMarkers"), comprising of experts in the fields of commercial, technical and HR to determine the cost of project, time invested and resources utilized. The each party shall nominate one member and the 2 nominated member shall nominate the presiding member who would make a "Draft Report" and send it for both parties comment and the final commented report shall be called as "Final Report". In case if either party is not satisfied with the "Final Report" the Dispute Resolution Mechanisms available under the agreement shall be invoked and the dispute may be settled. ( Note: The nominated members can be neutral or external party and cost of each nominated member will be borne by the respective party nominating it and cost of the Presiding member will be borne by both parties equally. In no event, such nominated member be associated with the competitor's of either party so as to have just and fair amicable resolutions)
4. Every License or customize agreement should have 'designated place/jurisdiction of use of license or software', any change of legal status due to acquisition or merger shall be reviewed commercially and operationally if the onsite support is required.
5. To & fro and other travel, lodging, etc activities that requires commuting of personnel or expert shall at actual along with the pocket expenses.
6. Taxes applicable to the services under this agreement shall be borne by customer and be levied as per the latest rate applicable at the time of billing
7. Customer shall have a right to deduct tax on income and It shall be obligatory for customer to issue the certificate of such tax deduction in the same financial year. In the event, if the said certificate is not issued within 30 days of deduction or before 30th April of coming financial year, for the deduction in the preceding financial year, then IPR Owner shall have a right to claim such money as legal due and recover the same from the customer with interest rate applicable under law shall also be applicable on such dues.