After target licensors have been identified, the organization should prepare proposal binders customized to the technology or intellectual property to be licensed from the target license or. The proposal binders may include the following sections:  a brief description of the organization and its licensing initiative; a high-level description of technology and/or intellectual property to be licensed; a summary of the applicable market segment; information regarding the products and/or services of the target license or; marketing materials and press releases regarding the technology and/or intellectual property to be licensed; summary of executed license agreements if applicable; copies of the actual protected technology and/or intellectual property. An example of such a proposal binder’s intellectual property section is shown in Appendix 2 of this chapter.

Negotiation Process Flowchart

Once a proposal binders have been assembled, the target organization should be contacted. The “Negotiation Process Flowchart” figure depicts the negotiation process.

As pointed out in the Licensing Executives Society training materials it is important to prepare, prepare, and prepare for negotiations. Effective due diligence preparation is absolutely key to a win-win successful negotiation process.

In their LES preconference workshops Paul Horan, stress the importance of some basic negotiation fundamentals. They are: (1) make sure the team thinks about all the impacts the various deal structure terms may have. There are lots of shades in gray, not just the option to go ahead or walkaway. (2) view the negotiation as just one of many steps in an ongoing process from first disclosure all the way through to contract performance. (3) make sure there’s continuity in the due diligence, negotiation and implementation teams. There’s a lot of tacit knowledge which is not reflected in the negotiation documents.  It’s important to the success of most projects.  (4) make sure that the team uses check lists but not over rely on them. It’s always important to make sure that you can see the forest through the trees.  Lastly (5) at the end of the negotiation it’s important to institutionalize the lessons learned for following negotiations.