contracts for non lawyers life sciences august 5, 2008

VLP Virtual Law School

Contracts for Non-Lawyers 101a:Contracts for Life Sciences Companies

August 5, 2008

Ellen LeznikFounding Partner, Virtual Law Partners LLP

[email protected](650) 321-1393

mailto:[email protected]

August 5, 2008 Virtual Law Partners LLP 2

Why Do We Need Contracts?

Contracts are more than promises – they are agreements between the parties that the law will enforce.

Well-drafted contracts clearly show the intent and responsibilities of the parties and provide a business plan, or a “road map”, for a specific transaction or business relationship.


Basic Contract Provisions

Defined terms Parties Purpose Parties’ responsibilities Description of the product or service (including

quality and quantity) Rights to the resulting product Standards of performance Price and payment terms


Basic Contract Provisions (cont’d)

Risk allocation Indemnification and insurance Limitation on liability Confidentiality Representations and warranties Term and termination Applicable law Dispute resolution Contract construction


Contract Templates

Contain necessary contract provisions for a specific type of transaction

Tailored for your company’s specific needs Can significantly reduce drafting and

negotiation effort Should be reviewed and updated regularly


Proper Use of Templates

Use each template only for the specific type of transaction for which it was designed:

CDA vs. MTA

MCDA vs. CDAMSA vs. Services AgreementMSA vs. CRO AgreementCTA vs. CRO Agreement

CTA for Phase I vs. CTA for Phase III


Proper Use of Templates (cont’d)

Customize the template before sending it to the other party:

- Party name and address

- Contract term

- Signature block

- Exhibits


Proper Use of Templates (cont’d)

Whenever possible, start the contracting process with your own company’s template:

- Negotiation advantage

- Potentially lower legal cost

- Exceptions: government contracts (e.g., CRADAs)


Frequently Negotiated Contract Provisions

IP ownership rights Indemnification Limitation on liability Representations and warranties Dispute resolution


IP Ownership Rights: Sample Provision; Alternative Language

4. Ownership

4.1 Definition of Invention. “Invention” means any discovery, invention, technology, result, data (including without limitation Study Data), specimen, material, information, concept or idea, whether or not patentable, resulting from, conceived or reduced to practice as a result of conducting the Study, or conceived or made using the Study Drug or Sponsor Confidential Information, together with all intellectual property rights therein. Inventions shall include, but not be limited to, processes, compositions, methods, software, tangible research products, formulas and techniques, patents, copyrights and know-how, and any improvements related thereto.

4.2 Disclosure of Inventions. Site, the Principal Investigator and Sub-Investigator (if applicable) shall promptly disclose in writing to Sponsor all Inventions made including, without limitation, those Inventions made by Site and/or the Principal Investigator and Sub-Investigators.


IP Ownership Rights (cont’d)

4.3 Sponsor Inventions.

(a) Site and Principal Investigator agree and acknowledge that Sponsor shall own all right, title, and interest in and to all Inventions.

(b) Site and Site’s employees (including the Principal Investigator and any Sub-Investigators), agents, sub-contractors, affiliates, and related personnel (including, but not limited to postgraduate students, research fellows, and other students) shall, upon Sponsor’s request and at Sponsor’s expense, execute such documents and take such other actions as Sponsor deems necessary for Sponsor to obtain such ownership and to apply for, secure, and maintain patent or other proprietary protection of such Inventions.

(c) All Inventions and any information with respect thereto shall be Sponsor Confidential Information subject to the confidentiality, non-disclosure, and non-use obligations set forth in Section _ hereto.


IP Ownership Rights (cont’d)

4.4 Assignment Obligations. Site shall ensure that each of its employees and any sub-contractors performing any part of the Study, including, without limitation, the Principal Investigator and any Sub-Investigators, shall have a contractual obligation to assign all inventions and intellectual property rights therein created, discovered, or generated by such personnel as a result of performing the Study during the term of this Agreement to Site so that Site can comply with its obligations under Section 4.3, and Site shall promptly obtain such assignments.

4.5 No Transfer of Rights. It is agreed that neither Sponsor, the Principal Investigator, the Sub-Investigator (if applicable) nor Site transfers to the other by operation of this Agreement any patent right, copyright, trademark right, or other proprietary right of any party, except as expressly set forth herein or as necessary to perform its obligations under this Agreement.


Indemnification:Sample Provision; Alternative Language

6. Indemnification

6.1 By Sponsor. (a) Sponsor agrees to indemnify, defend, and hold harmless the Principal Investigator, any Sub-Investigator, Site, and Site’s trustees, directors, officers, and employees, and those of Site’s sub-contractors whose services were pre-approved by Sponsor under Section __ (collectively, the “Site Indemnitees”) from any and all liability, loss, damage, cost, and expense, including reasonable attorneys’ fees and costs (collectively, “Losses”) in connection with any claim, demand or lawsuit for bodily injury or property damage brought by a third party arising from (i) any Study Drug or placebo supplied by Sponsor that is dispensed or administered in the course of the Study in strict accordance with the Protocol and Sponsor’s instructions, (ii) the negligence, recklessness, or willful misconduct of Sponsor or its officers, employees, agents, and representatives, (ii) a breach of the Sponsor’s obligations under this Agreement, or (iv) a breach of any of Sponsor’s representations and warranties made in Section __.


Indemnification (cont’d)

(b) Notwithstanding the foregoing, Sponsor shall not be obligated to indemnify the Site Indemnitees to the extent that Losses arise from (i) negligence, recklessness, or willful misconduct on the part of any of the Site Indemnitees, (ii) a breach of the Site’s obligations under this Agreement, (iii) a breach of any of Site’s representations and warranties made

in Section __, (iv) any injuries occurring at the Study Location (other than injuries caused by or attributable to any Study

Drug or placebo supplied by Sponsor that is dispensed or administered in the course of the Study in accordance with the Protocol), or (v) a failure of any of the Site Indemnitees to comply with any applicable FDA regulation or other federal, state, or local law or regulation.



6.2 By Site.

(a) Site agrees to indemnify, defend, and hold harmless Sponsor and its officers, directors, employees, agents, sub-contractors and representatives (the “Sponsor Indemnitees”) from any and all Losses they may suffer in connection with any claim, demand or lawsuit for bodily injury or property damage brought by a third party arising from (i) the negligence, recklessness, or willful misconduct on the part of the Site or its trustees, directors, officers, agents, employees, sub-contractors, or related personnel (including, without limitation, the Principal Investigator, Sub-Investigator (if applicable), postgraduate students, research fellows, and other students), (ii) a breach of the Site’s obligations under this Agreement, (iii) a breach of any of Site’s representations and warranties made in Section 9, (iv) any injuries occurring at the Study Location (other than injuries caused by or attributable to any Study Drug or placebo supplied by Sponsor that is dispensed or administered in the course of the Study in strict accordance with the Protocol and Sponsor’s instructions), or (v) a failure of any of the Site Indemnitees to comply with any applicable FDA regulation or other federal, state, or local law or regulation.



(b) Notwithstanding the foregoing, Site shall not be obligated to indemnify the Sponsor Indemnitees to the extent that such Losses arise from (i) any Study Drug or placebo supplied by Sponsor that is dispensed or administered in the course of the Study in strict accordance with the Protocol and Sponsor’s instructions, (ii) negligence, recklessness, or willful misconduct on the part of any of the Sponsor Indemnitees, (iii) breach of Sponsor’s obligations under this Agreement, or (iv) a breach of any of Sponsor’s representations and warranties made in Section __.



6.3 General Conditions of Indemnification.

(a) Each party's agreement to indemnify, defend, and hold the other party and its respective indemnitees harmless is conditioned upon the indemnified party: (i) providing written notice to the indemnifying party of the relevant claim, demand, or lawsuit within twenty (20) days after the indemnified party has knowledge of such claim, demand, or lawsuit, provided that a delay in providing such notice will not relieve the indemnifying party of its obligations under this Section 6 unless the indemnifying party is materially prejudiced by such delay; (ii) permitting the indemnifying party to assume full responsibility and authority to investigate, prepare for, and defend against any such claim, demand or lawsuit (subject to Section 6.4); and (iii) assisting the indemnifying party, at the indemnifying party's reasonable expense, in the investigation of, preparation for and defense of any such claim, demand or lawsuit.

(b) The indemnifying party will not, in defense of a third party claim, demand or lawsuit, except with the written consent of the indemnified party (such consent not to be unreasonably withheld or delayed), agree to the entry of any judgment or enter into any settlement which (i) does not include, as an unconditional term thereof, the giving by the claimant or plaintiff to the indemnified party of a release from all liability in respect thereof, or (ii) imposes certain non-monetary obligations on the indemnified party.



(c) If the indemnifying party assumes the defense of a third party claim, demand or lawsuit, the indemnifying party will not be subject to any liability for any settlement of such claim made by the indemnified party without the indemnifying party’s consent (but such consent will not be unreasonably withheld or delayed).

6.4Separate Defense of Claims.

(a) In the event that the parties cannot agree as to the application of Sections 6.1 and 6.2 hereto to any particular Loss within thirty (30) days after one party notifies the other party of such action, the parties may conduct separate defenses of such Loss.

(b) Each party further reserves the right to claim indemnity from the other in accordance with Sections 6.1 and 6.2 hereto upon resolution of the underlying claim, notwithstanding the provisions of Section 6.3(a)(ii) hereto.


Limitation on Liability:Sample Provision; Alternative Language

9. Limitation of Liability.

9.1 NEITHER THE COMPANY NOR THE PROVIDER SHALL BE LIABLE TO THE OTHER FOR ANY PUNITIVE, CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY OR SPECIAL DAMAGES (INCLUDING LOST REVENUES OR LOST PROFITS), IN CONNECTION WITH ANY CAUSE OF ACTION FOR BREACH OF THIS AGREEMENT, EXCEPT FOR BREACH OF CONFIDENTIALITY OBLIGATIONS UNDER SECTION 14. THE FOREGOING DOES NOT LIMIT EITHER PARTY’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 6.

9.2 Each party’s total aggregate liability to the other party arising out of or in connection with any cause of action for breach of this Agreement shall in no event exceed during the term of this Agreement the fees actually paid by Company to Provider pursuant to Section _ during the most recent twelve (12) months. The foregoing shall not apply to (i) any payments that are due and owing to Provider in accordance with Section _, (ii) any indemnification obligations under this Agreement, (iii) any liability arising from a cause of action other than breach of contract, or (iv) any liability arising out of either party’s intentional or willful misconduct or any activities or conduct in violation of applicable law.


Representations and Warranties: Sample Provision; Alternative Language

9. Representations and Warranties

9.1 No Inconsistent Obligations or Constraints Upon Site. Site and Principal Investigator each represent and warrant that they are qualified and permitted to enter into this Agreement and that the terms of the Agreement are not inconsistent with their other contractual arrangements. Site and Principal Investigator each warrant that they are not constrained by any existing agreement in providing complete disclosures to Sponsor concerning obligations to be performed under this Agreement.

9.2 Due Authorization. Each party represents and warrants that it is duly authorized to execute

and deliver this Agreement and to perform its obligations hereunder.

9.3 No Impairment; No Conflict. During the term of this Agreement, Site and Principal Investigator each warrant that they will not enter into any agreement to provide services which would in any way materially impair their ability to complete the Study in a timely fashion.

9.4 No Pending Litigation. Site and Principal Investigator each represent and warrant that: (a) they are not currently involved in any litigation, and is unaware of any pending litigation proceedings, relating to Site’s role in the conduct of a clinical trial for any third party; and (b) they have not received any warnings from the FDA (or any equivalent oversight body in a country other than the United States) relating to services they have provided to third parties during the conduct of a clinical trial.


Representations and Warranties (cont’d)

9.5 No Debarred or Disqualified Person.

(a) Site represents and warrants to Sponsor that neither it, nor its IRB, nor any of its employees or agents has been debarred pursuant to the 21 USC Part 335a, or regulations promulgated thereunder or similar laws or regulations in any applicable ex-U.S. jurisdiction, or disqualified by the FDA, nor have debarment or disqualification proceedings against it, its IRB or any of its employees or agents been commenced. Site will immediately notify Sponsor in writing if (i) any such proceedings have commenced, (ii) Site or any of its employees or agents is debarred or disqualified by the FDA, or (iii) the FDA has inspected or given Site notice of the FDA's intention to inspect Site.

(b) Site represents and warrants that it shall not employ, contract with, or retain any person, directly or indirectly, to perform the Study under this Agreement if such a person (a) is under investigation by the FDA for debarment or is presently debarred by the FDA pursuant to 21 USC Part 335a, or (b) has a disqualification hearing pending or has been disqualified by the FDA pursuant to 21 CFR Part 312.70 or its successor provisions.

(c) In addition, Site represents and warrants that it has not engaged in any conduct or activity which could lead to any of the above-mentioned disqualification or debarment actions. Site shall immediately notify Sponsor in writing if during the term of this Agreement Site or any person employed or retained by it to perform the Study engages in any conduct or activity that could lead to any of the above-mentioned disqualification or debarment actions.



9.5 Compliance of Principal Investigator. Site warrants that the Principal Investigator and, if applicable, the Sub-Investigators, has executed this Agreement, and that the Principal Investigator and, if applicable, the Sub-Investigators shall comply with all terms of this Agreement, including, without limitation, federal and state laws and regulations governing record keeping, Study conduct, receipt and disposition of Study Drug or Sponsor Materials, disclosure requirements, confidentiality, ownership of inventions, and the obtaining of informed consent from individuals participating in the Study.

9.6 Qualification of Principal Investigator and Sub-Investigator. Site warrants that the Principal Investigator and, if applicable, all Sub-Investigators are qualified by training and experience as appropriate experts to conduct the Study, as required under 21 CFR 312.53.

9.7 Financial Interests. Site warrants that it has no financial interests and/or arrangements with Sponsor that will require disclosure to the FDA in accordance with 21 CFR Part 54.

9.8 No Felony Conviction. Site warrants that neither Site nor any Site official or employee has been convicted of a felony under Federal law for conduct (i) relating to the development or approval, including the process for development or approval, of any drug, product, medical device, NDA, abbreviated NDA, PMA, 510(k) or IND; or (ii) otherwise relating to the regulation of any drug product or medical device under the FD&C Act.



9.9 WARRANTY DISCLAIMER. SITE AND THE PRINCIPAL INVESTIGATOR EACH UNDERSTAND AND AGREE THAT THE STUDY DRUG IS EXPERIMENTAL IN NATURE AND THAT THE STUDY DRUG AND OTHER SPONSOR MATERIALS ARE PROVIDED WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED, AND WITHOUT ANY REPRESENTATION OR WARRANTY THAT THE USE OF THE STUDY DRUG OR OTHER SPONSOR MATERIALS WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHT.


Dispute Resolution: Litigation – split jurisdiction

12.10Governing Law.

(a) In relation to any legal action brought by Site and/or Principal Investigator, this Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to its conflict of laws principles, and the California courts shall have exclusive jurisdiction.

(b) In relation to any legal action brought by Sponsor, this Agreement shall be governed by and construed in accordance with the laws of the State of Ohio without regard to its conflict of laws principles, and the Ohio courts shall have exclusive jurisdiction.

(c) The parties hereby agree to submit to the jurisdiction and venue of such courts as set forth in Sections 12.10(a) and (b).


Dispute Resolution: Arbitration

23. Dispute resolution.

23.1 Initial Dispute Resolution. All disputes, controversies, or claims arising under or related to this Agreement, including, without limitation, any action or claim based on tort, contract, or statute, or concerning the interpretation, effect, termination, validity, performance and/or breach of this Agreement (“Claim”), shall be first submitted to the senior executives of the Parties and each such senior executive shall attempt in good faith to resolve such Claim.

23.2 Arbitration. If the Parties are unable to resolve a given Claim pursuant to Section 23.1 within thirty (30) days of the first submission of such dispute to the senior executive officers, the Claim shall be finally settled in binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association.


Dispute Resolution: Arbitration (cont’d)

23.3 Arbitral Panel. The arbitral panel will be composed of three arbitrators (the “Panel”). Each party shall appoint one neutral arbitrator, who is not affiliated with either party. The two party-appointed arbitrators shall agree upon and appoint a third arbitrator who shall also be neutral and not affiliated with either party and who will serve as the chairperson of the Panel. All arbitrators shall be either a practicing lawyer (such term to include lawyers working as an in-house counsel and professors of law teaching at an accredited, or otherwise nationally recognized, school of law) or an active or retired judge, each with substantial experience practicing law and with sufficient familiarity with the laws of the State of Delaware.

23.4 Procedures.

(a) All decisions of the Panel will be by majority vote.

(b) The arbitration shall be conducted in English and a written order shall be prepared within fifteen (15) days after the conclusion of the arbitration hearing stating the reasons on which the award is based.



23.5 Venue and Governing Law.

(a) The place of the arbitration shall be Wilmington, Delaware, U.S.A.

(b) The arbitrators shall apply the laws of the state of

Delaware to any dispute and shall agree to faithfully apply such law as a condition of their appointment to the Panel.

23.6 Remedies. The Panel also shall be authorized to grant any

temporary, preliminary or permanent equitable remedy or relief the Panel deems just and equitable and within the scope of this Agreement, including, without limitation, an injunction or order for specific performance.



23.7 Panel Decision.

(a) The decision of the Panel shall be final and binding upon the parties.

(b) Judgment on the award may be entered by any court having jurisdiction over the person or property of the person against whom enforcement is sought.

23.8 Costs. Each party shall bear its own attorney’s fees, costs, and

disbursements arising out of the arbitration, and shall pay an equal share of the fees and costs of the Panel; provided, however, the Panel shall be authorized to determine whether a party is the prevailing party, and if so, to award to that prevailing party reimbursement for its reasonable attorneys’ fees, costs and disbursements (including, for example, expert witness fees and expenses, photocopy charges, travel expenses, etc.), and/or the fees and costs of the Panel.



23.9 Waiver of Rights. By agreeing to this binding arbitration provision, the parties understand that they are waiving certain rights and protections which may otherwise be available if a Claim between the parties were determined by litigation in court, including, without limitation, the right to a jury trial, certain rights of appeal, and a right to invoke formal rules of procedure and evidence.

contracts for non lawyers life sciences august 5, 2008

Documents

virtual law partners

sub investigator

sponsor inventions

contract templates

disclosure of inventions

ip ownership rights

quantity rights

transfer of rights