Counsel to the parties to intellectual property (IP) agreements routinely provide for certain terms to survive the closing of the transaction or termination of the agreement. These typically include representations and warranties, indemnities, and confidentiality, IP ownership and assignment obligations. However, to ensure that the client receives the full benefit of its bargain, counsel must also seek to determine any additional rights or services the client may need during a transitional post-closing or post-termination period.

The need for transitional rights or services often arise in:

The role of transitional rights and services in each of these agreements is set out below.

When a buyer acquires a subsidiary or division of a larger enterprise, it often finds that certain services essential to the business it has bought are intertwined with the seller's own operations and therefore not included in the sale. The seller and buyer often solve this problem by entering into a transition services agreement.

The transition services agreement is an agreement between the buyer and seller of the business for the seller to continue to provide these essential services to the buyer after the sale transaction closes. Entering into the agreement allows the transaction to proceed by assuring the buyer of a smooth transition of the services without having to rely on its own service support capabilities or procure the services of third parties.

Transition services agreements are therefore common in asset sales and sales of stock of subsidiary companies (commonly referred to as "carve-out" deals, because one business is being carved out from others), where the seller intends to retain other businesses and their associated support services. Some common examples of the services covered by transition services agreements include:

For a sample general transition services agreement that is favorable to the buyer and provides drafting notes and practice tips to buyer's and seller's counsel, see Standard Document, Transition Services Agreement.

For sample transitional trademark license clauses and related drafting notes and practice tips, see Standard Clauses, Transitional Trademark License Clauses (Pro-buyer) and Transitional Trademark License Clauses (Pro-seller).

In SaaS agreements and other information technology and IP service agreements, the customer is often dependent on the service provider's continuous and uninterrupted performance of the services. Customers for these services therefore typically seek the provider's agreement to perform transition services after the expiration or termination of the agreement to:

These agreements sometimes also grant temporary transition rights and services to licensed affiliates, businesses or divisions of the customer that the customer spins off during the term of the agreement (see, for example, Standard Document, Software License Agreement (Pro-licensee): Section 2.2(h) and the accompanying drafting note).

For sample SaaS agreement transitional rights and services provisions that are favorable to the customer and related practice tips, see Standard Document, Software as a Service (SaaS) Agreement (Pro-customer): Section 7.5(a)(vi) and Section 14.3(c)(ii) and the accompanying drafting notes.

IP license agreements frequently include transition rights that grant:

For a sample transition services agreement containing transition service terms and conditions and more information on transition services, see Standard Document, Transition Services Agreement.