A feedback clause generally gives a party a right and license to use ideas, comments, suggestions or similar feedback provided by the other party. Companies that offer products and services like these clauses because they allow the company way to learn information that can help them continue to improve their offerings. The standard argument in support of this type of clause is that it’s important to a product or service provider to ensure that simply discussing products in development with a client does not jeopardize their ability to use information they learn during that discussion. While that’s not unreasonable, there are a few different flavors of feedback clauses – the taste depends on which side of the fence you’re on.
As noted above, a typical feedback clause gives a party defines “Feedback” (e.g., any ideas, comments, suggestions or similar feedback provided by one party to the other); indicates that the provision of feedback is completely voluntary; and provides some grant of rights to the receiving party to use feedback. Think of this as the “base.” There are things you can “mix into” the base to change or enhance it, including a feedback trumps confidentiality provision, a feedback ownership provision, and/or a feedback warranty provision. If you’re on the receiving end of feedback, these mix-ins may be worth considering adding into a base clause. If you are on the disclosing end, these may be real causes for concern. (If you’d like a copy of my standard mix-in clauses, send me an email.)
Feedback trumps confidentiality. This mix-in states that any feedback provided, even if designated as confidential by the disclosing party, does not create any confidentiality obligation for the receiving party absent a separate written agreement, and the receiving party is free to use it the feedback without obligation or limitation. To the recipient, this ensures that any feedback can be freely used if provided by a recipient, regardless of confidentiality obligations under the Agreement. To the discloser, this can result in a “back door” around confidentiality.
Feedback ownership. This mix-in states that the disclosing party agrees to transfer all right, title and interest in and to feedback to the receiving Party. To the recipient, this ensures that they do not have to worry about creating derivative works of materials owned by a third party by using feedback. To the discloser, this can result in an inadvertent surrender of its own rights to any of its underlying proprietary information disclosed as feedback to a third party.
Feedback warranty. This mix-in is a warranty that the feedback does not infringe third party IP rights, is not subject to open source licensing obligations, and does not require payment of third party licensing fees. To the recipient, this can give some important protections if the recipient uses the feedback. To the discloser, this creates contractual representations for providing feedback, for which contractual damages may rise if the discloser breaches the warranty.
Here is my own base feedback clause where I represent MyCo (I flip this around and add in mix-ins on a case-by-case basis if warranted). It requires designation of feedback as such, and protects confidential information if inadvertently provided with feedback:
“The Parties acknowledge that MyCo may from time to time provide YourCo with ideas, comments, suggestions, or other feedback on the features or functionality of YourCo’s product offerings which is designated by the disclosing party as “Feedback” in writing on any written feedback, or contemporaneously with disclosure if disclosed orally (collectively, “Feedback”). The Parties agree and acknowledge that any Feedback is provided voluntarily by MyCo. In the event MyCo provides YourCo with Feedback, MyCo hereby grants to YourCo a perpetual, royalty-free, worldwide right to use such Feedback for the limited purpose of improving and creating derivative works of YourCo’s Products (notwithstanding the foregoing, the foregoing right shall not apply or extend to any portion of Feedback provided by MyCo which is MyCo’s Confidential Information, MyCo Technology or MyCo Materials), and the obligations of confidentiality set forth in this Agreement shall supersede and have priority over any Feedback usage rights.”
Finally, one of the most important things you can do regarding feedback is educate your business teams on what to watch out for when sharing feedback with a contractual partner – as in many areas, sound business practices can go a long way towards ensuring reliance on the legal language never becomes a necessity.