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Licensing Agreements and related transactions
One of the highlights of securing intellectual property, if it becomes popular or important to business, is that others must have your permission in order to lawfully use it. You can give those who need or want your intellectual property a license to use it in exchange for a “royalty.” (This term is a spillover from the times when patents were granted as a favor of the King or Queen to those in his or her favor.)
A royalty is essentially a fee paid by a third party for the use of your intellectual property. Often, it is in the form of an amount “per unit” or “per use.” It may be expressed as a percentage of the sales price (e.g., 3% of gross) for each object sold embodying your invention, or copyrighted work, or sold under your trademark.
There are many factors that must be considered in negotiating a royalty bearing license, or even a license that is royalty free. Because licenses are contracts, the parties are essentially free to bargain as they wish. As are result, complex and esoteric license arrangements are not infrequent.
It is important is that as many issues of critical concern as reasonably possible be carefully considered and thoroughly addressed during the negotiation and drafting of the license agreement. This is even more important when the arrangement can span multiple years, or involves technology and/or other IP at the core of the business. Then issues of what possible reservation of rights must be included, whether any rights will be cross-licensed back, what will be covered, how much will be paid, where the license will geographically extent, or in what field of use the license will be limited, in addition to how much will be paid, are just some issues that must usually be considered. This way the potential for subsequent disputes, misunderstandings or breaches is minimized.
DISCLAIMER
Every case is unique and requires an experienced attorney to address your particular situation. Please do not consider any of the information provided here to replace a personal consultation with an experienced IP lawyer.
Call Smith and Garg today at 281.210.0010 or complete our Contact Form and let us assist you with your intellectual property law services and litigation needs.
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