Contracts 101: Covenants, Representations and Warranties in IP License Agreements
It continually amazes me that many business folks who negotiate tons of IP license agreements , fail to understand the difference between covenants, representations, and warranties that are “standard” in many such agreements. Well, that is not too surprising. What is very surprising, however, is that many of their lawyers fail to appreciate the differences as well! Many think the terms are synonymous and thus use them interchangeably. They are not. So, for those of you tired of faking the funk, here is some (either fresh or refresher) Contracts 101! A covenant is a promise by a party by which it pledges that something is either done, will be done or shall not be done. Example 1 : “Licensee shall pay Licensor a flat royalty based on 2.5% of Gross Revenues received from the sale of Licensed Products.” Example 2 : “Company A hereby covenants not to sue Company B under any patent listed in Exhibit A for infringement based upon any act b...