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Considerations when licensing intellectual property

On Behalf of | Apr 20, 2022 | Intellectual Property Licensing |

Successful California business owners know that one major way to maximize profits and increase revenue is to license intellectual property. You have likely spent quite a bit of time, money and effort into creating your products, securing copyrights, trademarks or patents.

When other people want to use your IP, the terms of this deal are done through a licensing agreement. Since you own the IP, an agreement allows you to receive compensation from those you permit to use your IP. You are the licensor, and they are the licensee.

Be prepared to negotiate

Negotiation is a major part of a licensing agreement. An experienced attorney skilled in the art of negotiation can be a huge advantage. However, before starting to negotiate, it is important to have your IP valued, to make sure the terms of the licensing agreement are accurate.

Once the negotiations begin, here are some factors to consider:

  • Time period
  • Market use
  • Exclusivity
  • Future development rights

The length of the licensing agreement and the markets your IP is used in are key components of your licensing agreement. Language regarding the exclusivity or non-exclusivity of your products should be included, to make sure everyone understands if your products will or will not be licensed to others.

The licensee may want to enhance or develop new uses for your products. Your agreement should specify exactly what they may or may not do in the future with your IP.

Additional factors

In addition to these basic factors, don’t forget to consider including any fees for maintenance and protection of your IP, as well as any rights to assign or terminate the license by you or the licensee. You may be asked to do certain things, such as provide support to the licensee on using your IP, which is why having an experienced negotiator on your team is vital.

There are many benefits to a licensing agreement beyond simply increasing your revenue. An agreement gets your products into a new territory or area and gives you an advantage over your competitors. You are also afforded increased opportunities for mutually beneficial arrangements with your licensees, through access to each other’s knowledge and experience.