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The Intellectual Property clause
in pharmaceutical subcontracting agreements

Francine Le Péchon-Joubert, Charlotte Hébert-Salomon

The importance of identifying the relevant secret or patented innovations to adjust the drafting of these clauses to the parties' needs.

The intellectual property clause in manufacturing contracts should not be stipulated as a style clause. It is in both parties' interest to reflect on its precise purpose. In particular, it is necessary to identify in concrete terms the intellectual property rights at stake in the broad sense of the term, i.e. including any business or manufacturing secrets, and to address in this clause the objectives pursued by both parties as to how the concerned intangible assets shall be managed and dealt with both during and after the end of the contractual relationship.

Outsourcing the production of all or part of medical products through pharmaceutical subcontracting agreements concluded with Contract Development Manufacturing Organizations (CDMOs) requires, when drafting the contract, to pay very close attention to all future relations and interactions between the parties over the long term.

Indeed, the various provisions of the contract pertaining to the intangible assets at stake will prove decisive to the long-term success of the contractual relationship. And the reflection that needs to be carried out in the framework of the drafting of this contract is also a very good opportunity for making an inventory of the intangible assets at stake, and checking on the efficiency of the legal regime under which they are protected.

The intellectual property clause must indeed identify, in a concrete manner, the intellectual property rights held by each party, as well as the contract's impact thereon.

In this respect, beyond any patents and trademarks held by the parties, the contract should also address the business secrets involved in the production of the medical products concerned, as well as their know-how component.

While the legal nature, and the question of whether business secrets can be qualified as intellectual property rights, remain debated, the fact remains that they are of significant commercial value to companies, particularly in such manufacturing contracts - during the performance of which the parties are led to reveal certain valuable and sensitive information.

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