Technology Integration Agreements: What They Are & Key Common Issues

In my next installment on Distribution and Partnerships, I discuss technology integrations and the agreement to document that unique relationship. I start with defining technology integrations and list key common issues to get you thinking about what concepts to include in your business discussions with potential partners, and how to structure your conversation with your attorney when it comes to documenting the relationship.

Technology Integrations: Defined

Often, a tech company will want to add a new piece of technology or product to its platform or feature set, and will need to acquire the rights to do so. The objective is to enhance its product ecosystem, thereby making it more attractive to customers who need more comprehensive solutions. There may be some development work needed to ensure the new tech integrates well with the existing company’s product line. In these scenarios, the most important aspects to iron out first are: 1) which company is primarily responsible for the integration (the recipient or transferor), and 2) what assistance does the other company need to provide to successfully complete the integration?

1. Which Company is Primarily Responsible

The company primarily responsible for integration can be the recipient, the transferor, or both companies being equally responsible. The recipient being primarily responsible works well when the integration is for add-ons for the recipient’s existing product or service. In this case, the recipient is in the better position to lead the integration as they have the required deep knowledge of their own systems and capabilities. And, this type of integration requires direct access to the recipient’s systems, which companies are often loath to grant to third parties.

In the second case, the transferor is primarily responsible for the integration, which works for standalone solutions where the acquired tech must be taken from the transferor’s environment and connected to the recipient’s system, such as through an API or for turnkey purchases. 

In the last case, both companies are equally responsible, usually in a joint venture or co-development context, which I won't discuss in detail today, although many of the same issues below apply.

2. What Assistance Does the Other Company Need to Provide (Dependencies)

The next main aspect of tech partnerships is outlining dependencies, or what the other company needs to provide to the company identified in Step 1. This dependency mapping starts with documenting the information, docs, software, and services the assisting company will need to provide or create to assist the responsible company. This also includes mapping out which personnel have relevant knowledge and should be looped into the project, hardware needed and who is providing it, any historic data that needs to be transferred, and any 3rd party software or tools.

Key Common Issues 

Here are some common key issues and areas to address in the contract: 

• Responsibilities. Which company is primarily responsible for development, maintenance and support, and customer support.
• Dependencies. Where there are many dependencies, it may be better to have them written in a detailed schedule.
• Data. Ownership of the data shared, handling, security, and privacy compliance.
• Payment. What is the pricing model, how will revenue be shared, and what is the payment cadence.
• IP. What technology needs to be licensed in order for the integration to be successful, who owns the integrated features, and addressing trademarks and branding.
• End User Licenses. Which company will issue EULAs to the end users. 
• Breach Remedies. Address the typical possible failure scenarios: when the responsible company doesn’t complete their obligations, and when the assisting company doesn’t provide the assistance required, and what happens then.

The most common integration agreement you've probably seen in your day-to-day are API Access and Integration Agreements.

In my next post, I’ll address OEM partners – what they are, what makes that relationship distinct, and key common issues to address in the contract.

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