Manufacturing (Agreements – Exclusive Manufacturing)

 

• An exclusive manufacturing agreement (EMA) is a type of manufacturing agreement in which a granting legal entity grants to a recipient legal entity the exclusive right for the recipient legal entity to manufacture some product controlled or owned by the granting entity, within a specific geographical territory, and pursuant to terms and conditions, defined by the granting legal entity.

 

• If it is necessary for the granting legal entity to allow the recipient legal entity to have some access to some intellectual property (IP) (such as a patent or process) controlled or owned by the granting legal entity, in order for the recipient legal entity to effectuate its manufacturing of the product, then the granting legal entity must specify the terms and conditions of such access in the EMA.

 

• Due to the nature of the contracting arrangement involving an EMA, besides the unique provisions necessary to effectuate the particular work contemplated in the EMA – the most important of which should be the detailed description of the particular work to be performed by the recipient legal entity, under what circumstances, pursuant to what schedule and under what quality standards – the EMA should also contain the usual general provisions – all the relevant definitions for important terms used in the agreement (in particular, for any IP technical terms that may be necessary to understand the use of the license being granted to the licensee); change in ownership; compliance with all applicable domestic and international laws; consequences of ; contact information for notices; contact information for the parties; data privacy; data security; detailed description of IP ownership and rights between the parties; disclaimer of damages (such as consequential, incidental, lost profits, special or the like); governing law; governing language; identification of the parties; indemnification; insurance; limitation of liability; independent contractor status statement; no assignment without prior consent; non-compete; non-disclosure; non-solicitation; order of precedence for attachments and exhibits; representations and warranties; term of the agreement; termination (whether for cause or without cause, and outlining all the predicate events of breach and default); UCC title considerations; and the like.

 

• The EMA may also have a right-of-first-refusal (ROFR) provision, in which the granting legal entity will be required to offer the recipient entity the right to manufacture any future products of the granting legal entity that the granting legal entity may wish to specify, under whatever terms and conditions the granting entity may wish, and then only if the recipient legal entity rejects such offer (within some time period specified by the granting legal entity) would the granting legal entity be free to offer the manufacturing rights for such product to any other legal entity.

 

    Last updated 201021_1916