Inter-Company Development Services Agreement (creation of IP)
PricewaterhouseCoopers AG
This agreement is a Swiss-law governed standard agreement for the provision of services between group companies, and covers the provision of services that typically result in the creation of new intellectual property.
Author's Note
The Inter-Company Development Services Agreement is a Swiss-law governed standard agreement for the provision of services between group companies. Intra-group services agreements may be required to evidence the transfer pricing of services that are provided by one group company to another. This template covers the provision of services that typically result in the creation of new intellectual property, including: Software development Product development R&D Data and content creation and hosting Brand development and management This template assumes that ownership of the group’s valuable intellectual property is consolidated in one or a limited number of entities, and that the entity providing services is doing so as a limited-risk service provider. Ownership of any developed intellectual property will vest in the company. As the services provided under this template may be complex, there is the possibility to refer to a separate work...
Read moreThe Inter-Company Development Services Agreement is a Swiss-law governed standard agreement for the provision of services between group companies. Intra-group services agreements may be required to evidence the transfer pricing of services that are provided by one group company to another.
This template covers the provision of services that typically result in the creation of new intellectual property, including:
- Software development
- Product development
- R&D
- Data and content creation and hosting
- Brand development and management
This template assumes that ownership of the group’s valuable intellectual property is consolidated in one or a limited number of entities, and that the entity providing services is doing so as a limited-risk service provider. Ownership of any developed intellectual property will vest in the company.
As the services provided under this template may be complex, there is the possibility to refer to a separate work order for the purpose of describing the services provided in more detail. A separate work order template is also available for these purposes.
Terms which are configurable to the user’s needs include:
- Purpose and background;
- Term and termination;
- Nature and description of the services provided;
- Ability to refer to a separate work order;
- Use of materials provided by a third party;
- Restrictions on use of open source software;
- Fee structure (fixed fee or costs plus a mark-up) and payment and reconciliation mechanisms;
- Sub-contracting and assignment rights;
- Provisions relating to notices;
- Dispute resolution, jurisdiction and arbitration; and
- Other boiler-plate provisions (e.g. confidentiality, force majeure).
This template assumes that the service provider is acting on a limited-risk basis and is therefore indemnified against any loss or damage arising out of its provision of the services.
Circumstances of Use
This document is intended to be used for intra-group transfer pricing purposes to document the provision of services from one group company to another.
The Inter-company Development Services Agreement may be used for cross-border transactions where the parties have agreed to use Swiss law.
Terms of Use
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You (the registered user through whose account the purchase is made) may:
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- Share and use the document copies in connection with the circumstances described in this Author’s Note and only for the ordinary business purposes of the group of companies to which you belong.
Exclusions and Limitations
This template does not include a work order. A separate work order template is available.
If the services to be provided are in the nature of general and administrative services, the Inter-company Services Agreement (no creation of IP) may be more appropriate.
Other Comments
No warranty or representation is given or made that the allocation of functions and risk and the related transfer pricing arrangements provided for in this document are appropriate in the specific circumstances of any given group of companies. No legal or tax advice is provided and nothing in this template or the related user interview shall be deemed to constitute the provision of legal or tax advice in relation to any fact or matter. Where necessary, specialist legal and tax advice should be sought together with input from group accounting functions prior to executing this agreement.
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Frequently asked questions
This agreement assumes that the service provider will be performing research or development services related to the intellectual property. In broad terms, please describe the functions and responsibilities carried out by the service provider in the context of the group's activities. Moreover, this agreement assumes that the company owns certain of the group's key intellectual property. You must provide a high-level description of that intellectual property to give context to the agreement.
Development services such as the following may be provided: (1) software development services, (2) product development services, (3) research and development services, (4) data and hosting services, (5) brand management services or (6) other. If you choose the latter, you should review the standard recitals for appropriateness and add bespoke provisions as required.
You can choose to require the following documents: (1) technical documentation, (2) manufacturing process descriptions, (3) standards and use protocols, (4) diagrams and drawings, (5) research protocols, (6) customer facing documentation, (7) chemical processes and formulae, (8) pharmaceutical processes and formulae, (9) user manuals or (10) other.
It is expected that the service provider will comply with standard policies regarding security, IT systems, technology development etc. If specific named group policies apply in addition, you must/should list them in the agreement.
If the services have already commenced, the agreement will have retrospective effect.
The agreement can be of fixed term or indefinite term. Additionally, it is possible to sign an initial term with extension. The extension can be of indefinite nature or consist of successive additional terms.
The use of materials licensed from a third party may affect the ownership of work product resulting from the services.
If the services include software development consider whether the company should approve the use of open source software or if this is sufficiently covered by group policies.
Yes, but this must be stated in the agreement. The agreement can be limited to a specific territory (or territories) or to a specific country (or countries).
Yes, if stated. Sub-contracting can be: (1) permitted freely, with the option to require notice of Company when sub-contracting is set, (2) permitted on notice, but Company's approval required for strategically significant aspects of sub-contracting, (3) not permitted
Yes, if included in the agreement and when it is anticipated that the Company may monitor the provision of the services. Be aware that it may be necessary to demonstrate compliance with such a provision.
Yes, but only if it is intended that annual budgets and similar materials will be requested (and provided). Be aware that it may be necessary to demonstrate compliance with such a provision.
The services can be provided (1) on Company's request or (2) on an ongoing basis.
Ownership of pre-existing IP will remain with the service provider.
Warranties may include (1) standard mutual warranty as to right to enter into and perform agreement (arm's length), (2) Service Provider warrants ownership of underlying IP ("background work"), (3) Company warrants ownership of Company IP, (4) disclaim all warranties except as explicitly provided. The latter exclusion of warranties by the service provider creates greater risk for the other party.
If the service provider is compensated on a "limited risk" basis, the company will bear most risks related to the services. Consider whether it is nevertheless appropriate to exclude certain causes of loss, which are within the service provider's control. Examples where company's liability can be excluded: (a) breach of confidentiality, (b) failure to comply with Policies, (c) breach of applicable law.
The right for parties to terminate on the other party's change of control may be included in the contract. Furthermore, a right to require continued provision of the services after termination is common in complex services agreements or where services require transition to a third party.
If stated, parties may not assign without consent. Nevertheless, It may be explicitly allowed to assign within the group: (1) for either party, (2) for Company or (3) for Service Provider.
Yes, in an intra-group agreement, the parties may have more flexibility if email qualifies as writing (e.g. for the purposes of “written notice”). This must be specified in the agreement and may even allow termination. It is good practice to specify who is able to receive or send notices. Moreover, inserting a title is recommended, rather than an individual's name (e.g. "the Finance Director"), as roles and responsibilities change over time.
The confidentiality clause can be short or long depending on whether the agreement contains complex processes or highly sensitive or confidential information. With the latter, a long clause is recommended. The contents as well as its existence can be assigned to be confidential.
It may be appropriate to prohibit copies of confidential information being made if confidential information is being supplied in hard-copy format. If information is provided electronically, consider whether such a restriction is practical.
You may specify whether each party should bear their own costs arising from the negotiation, preparation, amendment, preservation and enforcement of the agreement, or whether one party should bear all the costs.
If there is a prior agreement relating to the same/similar subject matter as this agreement, you may explicitly state whether or not it is to be treated as superseded and replaced by this agreement.
Yes. You may specify a process for escalation of disputes to the parties’ senior representatives, prior to any litigation or arbitration.
You may choose to resolve disputes in court or through arbitration.
This agreement is governed by Swiss law. If you do not specify the place of jurisdiction, any court which is competent under Swiss law will have jurisdiction to resolve a dispute.
You can either choose a (1) short clause which is recommended in agreements for services that are not dependent on IT and/or are mainly connected to activities performed by people. Alternatively, you can choose a (2) long clause which is used in agreements for complex services and/or where the provision of services is highly dependent on the use of IT. The number of days of non-performance until termination of the contract may be defined in the contract.
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FINMA publishes partially revised circular on "video and online identification” From 13 February 2018 to 28 March 2018 the Swiss Financial Market Supervisory Authority FINMA conducted a public hearing on the draft of the partially revised FINMA Circular 2016/7 "Video and online identification". FINMA published the partially revised circular on 17 July 2018. The aim of the partial revision is to adapt the Circular to the...
New updates on the safe-keeping duties for depositaries of Alternative Investment Funds The European Commission has published a draft delegated regulation proposing to amend the Delegated Regulation (EU) No 231/2013 to the Alternative Investment Fund Managers Directive (AIFMD) as regards safe-keeping duties of depositaries for Alternative Investment Funds (AIFs). The newly proposed obligations would address depositaries and...
FinSA and FinIA: Differences resolved between the National Council and the Council of States On 12 June 2018, the National Council resolved the last differences on the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA). Thus, the FinSA and the FinIA are ready for the final votes, which will take place on Friday, 15 June 2018.
Get up to Speed on the EEA Agreement Amendment On 31 May 2018 the EEA Joint Committee reached a decision without reservation regarding the implementation of Solvency II Level 2 and EMIR Level 2 frameworks. Thus, as of 1 June 2018, the EMIR and Solvency II Level 2 delegated acts are applicable to Liechtenstein, Norway and Island.
EMIR Transaktionsreporting und Solvency II in Liechtenstein Go Live – Kommen Sie auf den neusten Stand bzgl. der EWR Vertragsergänzung Am 31. Mai 2018 beschloss der gemeinsame EWR-Ausschuss die vorbehaltslose Implementation der Solvency II Level 2 und der EMIR Level 2 delegierten Rechtsakte. Folglich wurden per 01. Juni 2018 die EMIR und Solvency II Level 2 Rechtsakte in Liechtenstein, Norwegen und Island anwendbar.
FinIA and FinSA on the right track On 29 May 2018, the National Council passed its resolution on the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA). Shortly thereafter, on 4 June 2018, the Council of States discussed about FinSA and FinIA and resolved the following differences:
FINSA and FINIA: Only few differences remaining On Tuesday 29 May 2018, the National Council discussed again about the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA). After the resolution of the National Council a few differences remain to the text approved by the Council of State.
How tightened corruption laws affects compliance management systems With the revision of the Criminal Law on Corruption, the criminal responsibility of companies and their management is gaining in importance.
Switzerland introduces the clearing obligation for certain derivatives for FC+ and NFC+ The Swiss Financial Market Supervisory Authority FINMA has recently announced that it will introduce the clearing obligation, meaning to clear certain derivatives over central counterparties, under the Swiss Financial Market Infrastructure Act (FMIA) that are traded by counterparties having the status of either an FC+, meaning large Financial...
A primer on cryptocurrencies trading regulation in Switzerland This primer seeks to give an overview of the key obligations under Swiss regulatory laws related to cryptocurrencies and asset management related to cryptocurrencies.
An initial coin offering (ICO) or a token sale is when a company sells a predefined number of digital tokens to the public in a limited period of time. The ICO market has grown very rapidly in recent months and has been a new avenue for blockchain-based start-ups and projects to get the funding needed to launch their projects.
Partial entry into force of the Swiss DLT-act On 1 February 2021, the parts of the Swiss DLT-act that introduce ledger-based securities (i.e. register uncertificated securities) to Swiss law have entered into force. The remaining provisions of the DLT-act will enter into force on 1 August 2021.
The E-ID Act from a data protection perspective On 7 March, the E-ID Act will be put to the vote in Switzerland. Especially in the area of data protection, opponents and supporters disagree on the extent to which the introduction of the law would cause problems.
Platform Economy: Prepare for the future and outshine with an online matchmaker Platform business models has changed how businesses are conceptualised and conducted. Interested to know more about the value of a platform business model?
A unique opportunity to become a responsible business role model With the narrow rejection of the Swiss Responsible Business Initiative (RBI), Swiss companies will have the challenge of aligning with stricter, EU-inspired standards in terms of corporate disclosure and sectoral human rights due diligence. In this blog post we explain how you can take the reins and become best in class – and why the current...