2) Licensing Agreements: Do's and Don'ts - Case Study

1. Devco is a small Alberta software developer(1) and has developed a complex scientific computer program (the "Licensed Software").

2. Interco is a large international corporation based in London, England and has a major office in Houston, Texas; it is a successful international distributor of scientific software.

3. Interco and Devco entered into a license agreement in 1982 concerning an earlier version of the Licensed Software; recently there has been a number of disagreements about the interpretation of the 1982 license agreement.

Using all the negotiating skills known to him(2), the President of Devco has spent several weeks convincing Interco to market the latest version of the Licensed Software, rather than terminating their relationship.

The President of Devco has written what he considers to be all the pertinent details of the new deal on the back of an envelope and delivers the envelope to our hero, Dreadful Drafter.

The details on the envelope are as follows:

"(i) disputes are settled, it was an unfortunate misunderstanding;

(ii) Interco gets all U.S. and England;

(iii) Best efforts in marketing;

(iv) Interco gets source code so it can provide support;

(v) Devco gets 5% royalty;

(vi) Devco gets rights to all improvements but Interco can use the improvements it makes;

(vii) no warranties; and

(viii) five year term, renewable."

Let us look over Dreadful Drafter's shoulder as he wrestles with the items on the President's list.