IP Licensing for Business Companies & Organizations – How to Do it Right?
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Any form of Intellectual Property (IP), be it a trademark, patent, or copyright, can be licensed to third parties. Through IP licensing, IP rights holders grant third parties the exclusive right to use their IP while retaining their ownership. Generally, the IP holder or the licensor (in this case) receives payment in the form of royalties in exchange for granting the exclusive right to use his IP to some third party or the licensee (in this case). Another way to understand the concept of IP licensing is the ‘leasing’ of IP assets in exchange for a fee. In contrast to IP assignments, which transfer the entire ownership of the IP asset, IP licensing provides only limited use. It permits the licensees to extract benefits from the said IP while duly safeguarding the licensor’s ownership rights.
IP licensing provides business companies and organizations with additional or core revenue streams, which enables them to increase brand awareness, enhance their overall reputation, and extend their offerings (products or services) into new geographies and markets across the globe cost-effectively. However, if IP validity or ownership is unclear or not well-described, IP licensing can also pose critical business and financial risks. So, let us now make ourselves familiar with a few ways using which business companies and organizations can make IP licensing convenient and effective.
Understanding the IP License
If a business company or organization is looking forward to licensing its IP assets, some specific aspects need to be considered. Firstly, it is imperative to understand that an IP license is a contract or an agreement between the licensor and the licensee. It defines and describes the appropriate actions that each party will take concerning the IP assets in question. Furthermore, it outlines the legal actions that the licensor might opt for in the scenario where the licensee infringes upon his IP. The IP licensing agreement is written and prepared in such a way that the parties involved would be able to reasonably recognize and interpret their respective rights and obligations.
Creating the IP Licensing Agreement
Before engaging in an IP licensing agreement with a potential licensee, a business company, i.e., the licensor, in this case, must conduct due diligence to ensure that it is the true and sole owner of the IP assets to be referred to and used in the agreement. Without any doubt, seeking assistance from an experienced IP attorney or specialist proves to be beneficial in this aspect. For instance, an expert in the field of IP can assist in figuring out whether there is another party that already or jointly owns the IP assets and whether the proposed licensor holds the applicable permissions to sublicense.
License agreements should be in a well-written form as they are to be signed by the parties involved. For creating an IP licensing agreement, both the parties, i.e., the licensor and the licensee, must be open to negotiation. The reason behind the same is that it usually becomes unlikely that both the licensor and the licensee will immediately see eye to eye on all aspects of the IP licensing agreement. It is essential to note that the objective of entering an IP licensing agreement is for both the licensor and the licensee to succeed and thrive in their respective business ventures continuously and not suing one another at a later stage or battling out in court. Before proceeding towards the negotiation stage, a licensor must keep bear in mind some provisions, including the costs (royalties, lump-sum fee, or recurring fee), the term (indefinitely or annually), the territory (international, national, or regional), the type of agreement (exclusive or non-exclusive), the rights included (distribution, reproduction, adaptation), infringement, assignment of the rights, governing laws, indemnification, and dispute resolution.
Kindly note that the provisions mentioned above don’t make an all-inclusive list, and each one of them are modifiable in their respective rights. Every business company and organization needs to understand that the licensing of IP assets is a delicate process and should be treated in such a manner only. It is a matter of fact that yes – IP licensing agreements are typically long-term business partnerships. Therefore, a business company or organization should consider whether it is suitable to sign a non-disclosure agreement to safeguard and not misuse any piece of info it considers confidential, valuable, and not belonging to the public domain.
Bottom Line
Entering a respectable IP licensing agreement sets the initial boundaries for the parties involved. If a business company is looking forward to licensing its IP, it will be responsible for enforcing the licensing agreement while paying attention to the licensee’s use of the said IP to not cause great damage in the future. As already stated above, licensing agreements are like long-term relationships; therefore, it is crucial to ensure that the parties involved have a crystal clear understanding of every aspect in their minds to get a fair deal. For diminishing the chances of a future lawsuit, business companies and organizations should work under the guidance and assistance of an IP professional. An expert in the field of IP shall thoroughly spell out which party is responsible for what. ✅ For more visit: https://www.kashishipr.com/
