This is generally sought through a period of exclusivity on the detailed product, or type of product, that has been developed. This means that the supplier agrees not to supply to another customer.

In some circumstances exclusivity is achieved through the medium of intellectual property rights (“IPRs”). Here the customer requires the developer to either assign any IPRs in the product that has been developed to them. This is effective if the product is, for instance, an invention which qualifies for patent protection, but is less so when the product is less technical or is differentiated from the market in more subtle ways.

If, for instance, a retailer is developing a new range of food products characterised in that all the ingredients are both organic and grown in the UK, there is probably no useful intellectual property right that can be used to provide exclusivity.

In these circumstances, a contract under which the supplier agrees only to supply the product to the customer for a period, or in a particular geographical market or in certain formats is a more effective way of achieving exclusivity, particularly when combined with an obligation of confidentiality restricting leakage of key manufacturing information from the supplier to their competitors.

Such agreements appear deceptively simple, but require highly skilled drafting to ensure that they are effective, including a detailed knowledge of the constraints of UK and EU competition law, which operates to restrict the use of agreements which seek to restrain trade between or within EU states. Negotiation skills, based on a knowledge of common practice and available options are also crucial to achieving beneficial agreements.

VSH have substantial experience in drafting, negotiating and enforcing exclusivity agreements, acting for high street name retailers and distributors.

For further information please contact:

john.davies@vshlaw.co.uk