Deborah A. Peacock, P.E.
Managing Partner, President/CEO
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Licensing intellectual property can be a lucrative proposition for the IP owner. Ownership is maintained while receiving ongoing payments for its use. Likewise, a successful licensing agreement can be advantageous for the licensee, which obtains access to products, services or brands that would otherwise be unavailable. The key to successful licensing agreements is recognizing that the desired outcome is favorable to both parties.
Create a Win-Win Atmosphere
The bottom line is that a successful licensing agreement creates a long-term relationship between the parties involved. The outcome is favorable for both parties: the IP owner receives an ongoing source of essentially passive income, and the licensee obtains ongoing access to intellectual property that it would otherwise not be able to utilize. Keeping that fact in mind sets the stage for creating the proper atmosphere for productive negotiating rather than an adversarial stance: aiming for a win-win rather than win-lose.
Understanding Market Applications, Scope, and Business Model
Growth potential for the intellectual property involved, along with market competition, also shapes license negotiations. Likewise, the scope of the rights regarding field of use, territory, and product applications that the IP owner is willing to grant should be considered alongside the rights that the licensee is seeking. The framework of the business model for the licensing agreement is the most important aspect of any licensing deal. The IP owner and the potential licensee must be on the same page regarding how the intellectual property will be used by the licensee after the contract has been finalized.
The Attorney’s Role in the Negotiations
Licensing agreements for intellectual property can be incredibly complex and should only be done by an attorney specialized in intellectual property. In addition to legal issues specific to intellectual property like the assignment of specific rights and maintenance obligations, licensing agreements also involve complex or sensitive commercial legal issues, including representations, warranties, indemnification clauses, quality control, and payment regimes. The parties involved may or may not even understand such concepts, let alone have any interest in understanding them, but such things may need to be addressed to avoid issues down the road. Addressing them at the outset of the licensing process can save a lot of legal wear and tear. That’s where the services of a top-notch IP attorney or firm become essential.