Question

Recently Johnson & Johnson, a big research-based pharmaceutical company, signs a contract with Moderna, a start-up biotech company, and

1. promises to Grant Moderna the exclusive rights to use Johnson & Johnson’s Technology Q for the life of its patent. This license gives Moderna the exclusive right to market, distribute, and manufacture Vaccine Q19 as developed using Technology Q. Johnson & Johnson views the patent as functional intellectual property.

2. Assign two full-time employees to perform research and development work for Moderna in a specially designated Johnson & Johnson lab facility. The primary objective of these service is to get regulatory approval to market and distribute Vaccine Q19 using Technology Q.

Moderna is required to use Johnson & Johnson’s lab to perform the research and development service necessary to develop Vaccine Q19 using Technology Q, because the expertise related to Technology Q is proprietary to Johnson & Johnson and not available elsewhere.

Required Questions

How many performance obligations (s) can you find in the contract?

Explain your reasoning for each performance obligation

Answer 1

Answer for following questions:

Q1: How many performance obligations (s) can you find in the contract?

Answer: 3. (Three)

Q2: Explain your reasoning for each performance obligation.

Answer: Following are the Performance Obligations:

1. Grant of License: License Provider is Johnson and Johnson and License receiver is Mederna. This Patent License will give rights to Mederna (start-up entity) to exclusively use the research facility of Johnson and Johnson's Technology Q. This is an obligation on the part of Johnson and Johnson to provide the facility for research of Vaccine Q19.

2. Usage of License: There is also an obligation on the part of Mederna to utilise the 'Technology Q' and keep it active. This is because Johnson and Johnson views this License as a functional IPR Contract.

3. Assigning of two full-time employees: Johnson and Johnson, as mentioned in contract, must appoint two full-time employees to work in laboratory with Mederna staff. Their job role is also pre-determined. These two staff have to work and bring regulatory approval to market and distribute Vaccine Q19 using Technology Q only.

4. Using Technology Q: This contract also obliges the Mederna to use only Technology Q for development, marketing and distributing Vaccine Q19. This is exclusive property of Johnson and Johnson and must be used only that for this vaccine.

Conclusion: Contract is a promise to act as decided by both parties. Failing which, may bring legal consequenses. There can be two or more Performance Obligations on either parties for one contract. In the given case, there are 4 obligations. Two on each party.

Comment below if more explanation is needed.

All the best !!