This article is written by Samridhi Jain pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho.
What is a collaboration agreement?
A collaboration arrangement is a contract signed by at least two people who choose to collaborate or cooperate on a commercial project. The arrangement sets out the basic terms and conditions of the parties’ working partnership, including responsibility-sharing and income distribution, as well as what happens if the parties can’t agree or wish to avoid working on the project and end the arrangement.
For example, there could be a collaboration agreement between two Instagram influencers, between two different companies, there could be a collaboration between an Indian and a foreign entity, there are certain universities that collaborate with companies for courses, and many more. Another example could be that if a project is a technology-based or data transfer project then it will list out the specific provisions as to who is responsible for the intellectual property, etc.
There are so many examples of collaboration in real life like Cheetos and Forever 21, Lego and Stranger things, Uber and Spotify, Louis Vuitton and Supreme, and many more.
Let’s attempt to understand the collaboration deal between Vodafone which is a British multinational telecommunications company whereas Google Cloud is a platform which is offered by Google as a suite of cloud computing services and is a provider of computing resources for developing, deploying, and operating applications on the web.
These two entities have agreed to build an integrated data infrastructure and framework along with hosting ecosystems which will require a collaboration agreement.
What was the recent deal between Vodafone and Google Cloud?
They have agreed to a six-year strategic alliance through a collaboration agreement to develop a powerful new integrated data infrastructure and distributed framework for Vodafone, which will allow the company to develop new digital products and services for consumers.
Vodafone will use Google Cloud to host its SAP ecosystem as well as both big data and business analytics workloads.
Vodafone’s Chief Technology Officer, Johan Wibergh, stated: “Vodafone is building a powerful foundation for a digital future. We have vast amounts of data which, when securely processed and made available across our footprint using the collective power of Vodafone and Google Cloud’s engineering expertise, will transform our services, to our customers and governments, and the societies where they live and serve.”
Google Cloud CEO Thomas Kurian commented: “Telecommunications firms are increasingly differentiating their customer experiences through the use of data and analytics, and this has never been more important than during the current pandemic. We are thrilled to be selected as Vodafone’s global strategic cloud partner for analytics and SAP, and to co-innovate on new products that will accelerate the industry’s digital transformation.”
What do collaboration agreements usually contain?
Means the overall purpose of the partnership. For example, in this deal, the focus is on integrating data infrastructure and creating a strong data network.
This specifies the extent of the collaborative relationship between the parties. It contains scope and items that cover the focus of the agreement. For example, in the agreement between Vodafone and Google Cloud, they will collaborate to create a strong digital automated data network with the additional flexibility of collecting and transferring large amounts of data worldwide, they will also develop platforms and optimized experiences for consumers.
Used to formalise the relationship through a detailed description of the project, parties’ contributions, and payment terms. For example, these companies will create a timeline project map or a project plan and then enter into a legally binding contract to formalise the relationship and carry out the project successfully.
After understanding what a collaboration agreement contains it’s important to know the differences that exist with a few other agreements like a strategic alliance and a joint venture agreement as these are usually used interchangeably while in reality, they are different agreements.
How does a collaboration agreement differ from a strategic alliance agreement?
Collaboration is a project or set of tasks carried out by two or more people in a collaborative effort for mutual benefit, whereas an alliance is primarily about several collaborations over a longer duration that can involve multiple projects and deals.
In the case of Vodafone and Google Cloud, the deal is a strategic alliance or a partnership deal while they have entered into a collaboration agreement only for building integrated data infrastructure which has a defined scope.
Differences between a collaboration agreement and a joint venture agreement
Collaboration is where two parties benefit by collaborating with each other to serve their own interests where the two parties are differentiated in terms of how they are perceived by that relationship. This can be better understood by differentiating with a joint venture agreement.
A joint venture agreement is formed from a business perspective where the parties share their assets and expertise to sustain and grow a business entity. It’s a different type of collaboration where there are not many differences between how the parties are perceived in terms of their business relationship. That means that a Joint Venture is more like a partnership while collaboration is more like talent integration where the two parties are completely separate.
Important elements of a collaboration agreement
A collaboration agreement should contain terms that govern the collaboration, including but not limited to:
- How will the collaboration operate?
- What is the purpose?
- Who contributes what in terms of money, time, and skills?
- Who is the owner?
- What’s the crediting policy?
- What are the payment terms?
- Who’s in control?
- What about unforeseen events?
- What happens if one party quits?
A few things to keep in mind before drafting a collaboration agreement
The output, like any commercial arrangement, is normally just as successful as the parties’ input. That’s exactly why the input should be 100% and of superior quality. Here are a few things to remember about collaboration agreements:
- Ensure that the terms of participation are negotiated from the start;
- Discuss explicitly what will happen at the end of the term and carefully record your agreement;
- Consider what will happen if the partnership is good before it starts, provided the members’ bargaining power; and
- Be sure you follow the collaboration contract’s obligations, keep records of your compliance, and be ready to exercise your rights if necessary.
Important clauses of a collaboration agreement
Define important terms used throughout the agreement
The definitions clause is the most common clause in almost all agreements containing usage of the same terms repeatedly and is created for convenience. It becomes important to define such used terms for better clarity and understanding of the entire agreement. These terms must be capitalized throughout the agreement.
In this agreement terms like confidential information, network, service, system, software, data infrastructure, ecosystem, digital transformation, technical specifications, sap, nucleus, dynamo, digital automated data network, smart network, broadband speed, network, strategic alliance, etc can be defined.
Define the purpose of the collaboration
Why is the agreement being entered into in the first place? Why are parties coming together and for what? Clearly specifying the objective and purpose will set the contract in the right direction. It will also help in determining both the parties’ obligations.
The key goal of Vodafone’s collaboration with Google Cloud is to build a powerful new integrated data platform and distribution network for the group, which will enable it to create new digital goods and services for customers using the SAP ecosystem, as well as big data and business analytics workloads.
Clearly specify the obligations, responsibilities, and expectations from each party
Establishing the obligations and responsibilities in an unambiguous manner will lead to better clarity and performance of the same.
In this arrangement, Vodafone’s obligations and responsibilities could include not disclosing confidential information, ensuring data is protected, ensuring all details are provided, building integrated systems that will better facilitate the alliance process, ensuring the protection of IP rights of the newly innovated products/services and many more.
Google Cloud’s obligations could include access to SAP and technological infrastructure, providing the right ecosystem for data handling, maintaining confidentiality, securing IP rights collectively, ensuring collective data protection, ensuring smooth flow of information for data analysis, and much more. Both the parties must ensure access to financial, human, and other resources, systems needed to accomplish the purpose of the collaboration.
Specify the duration or term of the agreement
Defining the term of the alliance is crucial in any agreement. For example, this collaboration agreement is a fixed agreement for 6 years. This clause should specify the execution date and end date of the agreement.
The parties may consent in writing to extend the duration of this Contract after the Initial Period expires.
When joining the collaboration agreement, each side relies on the representations and warranties made by the other
Representations and warranties are a statement of facts as to what business the company engages in, the basis on which the contractual relationship is formed, and warranties are undertaken to make good any loss that might occur in the future.
For example, here both the companies will state the business they engage in, what each of their companies stands for and what they undertake to indemnify in an unforeseen situation.
Define the exact scope of services expected from each collaborator
Scope of collaboration must be clearly set out as it gives information regarding what is permissible, what is not, what has to be done for the success of this collaboration and the list of activities to be undertaken under the context of the purpose set out in the agreement.
Vodafone and Google Cloud will collaborate to create a strong digital automated data network with the additional flexibility of collecting and transferring large amounts of data worldwide from various platforms into the cloud, as part of a major extension of their current relationship.
The portal, dubbed ‘Nucleus,’ will house a new machine called ‘Dynamo,’ which will propel data across Vodafone, allowing it to deliver new, personalised products and services to consumers more efficiently across different markets. Vodafone will be able to tailor new networking capabilities for homes and companies using Dynamo by releasing smart network features and delivering a burst of broadband speed.
Vodafone consumers around the world will have a deeper and more optimized experience by generating more detailed knowledge and data-driven analysis through the organisation and through its partners.
Following their mutual efforts, Vodafone and Google Cloud will look at providing advisory services to other multi-national organisations and companies, either together or separately.
Data storage and privacy
According to local jurisdiction standards and in compliance with local laws and regulations, all data provided by Vodafone in the markets in which it operates is stored and processed in the appropriate Google Cloud facilities. Customers’ permissions, as well as Vodafone’s own stringent protection and privacy by design procedures, are all taken into account.
The payment terms and structure
This clause will specify how the payment procedure will work. It could be commission-based, project-based, deal-based, target-based, or even a milestone-based system and this completely depends on the party negotiations.
For example, in this agreement, both the companies will have to decide how their payments will roll out over the 6 years of collaboration.
This is one of the most important clauses in such agreements because of the data and information exchange that takes place between the two parties. Restrictions on how disclosed information and registered facilities can be used must also be specified. For example, in this collaboration agreement since there is a lot of data sharing involved- both parties will make sure the data is protected, secured, and kept confidential by using a confidentiality clause.
This clause shall contain information regarding the permissibility of licensees to sublicense rights or forbid sublicensing rights, what kind of access to license is available and when it can be used, how can the licenses be used, and what are the different authorizations given between the parties.
For example, the parties in this collaboration agreement will have to ensure adherence to all statutory compliances, licences and the parties may also undertake due diligence to ensure all legal documents are in place.
This clause shall contain the following aspects:
- Whether the usage of intellectual property developed as a result of the collaboration is unrestricted?
- How Intellectual property ownership was governed in the past?
- What are the different Intellectual-property-related warranties?
- Non-disclosure and non-circumvention are expected whether clients or customer data is provided.
- Third-party copyright violations: what to do and how to do so?
- Confidentiality obligations, both before and after the term.
All boilerplate clauses
Force majeure, release, notices, severability, assignment, modification, waiver, entire agreement, termination, post-termination obligations, consequences of termination, indemnity, limitation of liability, third party rights, counterparts, governing law, and jurisdiction and dispute resolution.
These clauses are almost present in every contract and must be crafted specifically to adhere to client needs and must not be copy-pasted.
A quick checklist to negotiating a collaboration agreement effectively
- Before you start negotiations, be aware of your personal deal-breakers.
- Until negotiating, verify the ownership of all the intellectual property.
- Communicate regarding your goals and set them mutually.
- Rely on facts rather than feelings.
- Pose leading questions which means you speak in such a manner so that you get the individual to agree with your point of view.
- Ask questions instead of demanding to develop a deeper understanding of a person’s thought process.
- Conflicts can be resolved by going back to the contents of the agreement.
- Discuss what will happen in the event of an alliance dissolution.
There are so many aspects and elements that form a part of a collaboration agreement between the parties. It’s important to consider each step of the process a stepping stone to a great deal so that the contractual relationship does not result in legal issues in the future.
Exploring the aspects of the deal between Vodafone and Google cloud becomes critical for lawyers as we move forward with an aim of understanding and developing better client relationships and also understanding the business aspects involved in a deal.
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