So you are an entrepreneur who started a successful business by bringing to life an idea that resulted in an amazing product or service. Congratulations! As part of your success, you have likely developed intellectual property and associated goodwill for these products or services. However, are you maximizing your profits from these assets? Intellectual property is often the most valuable asset of your business.By licensing these assets, you can generate new revenue streams without investing a great deal of time or expense.Licensing agreements grant permission to other businesses to use your company’s intellectual property in exchange for royalty payments.
If you are considering offering your products or services through a license agreement, your first step is to determine whether you own works which are protectable by copyright, trademark, patent, or some other legally recognized form or protection that can be licensed. For example, a trademark brand may not be registerable as a federal trademark unless it meets certain requirements. Without trademark protection, licensing may not be an option since most businesses will not enter into a licensing agreement with a party who does have protected or protectable intellectual property.A knowledgeable intellectual property attorney can assist you in making this initial assessment, without spending a great deal of time or money.
Once you determine that your business indeed has protected intellectual property to license, you will then seek out third party businesses who may be interested in licensing your product or service (assuming your target businesses haven’t found you already). After you find a suitable business or group of businesses, the next step will involve negotiating and entering into the licensing agreements. This is a crucial step to insure your business and intellectual property are protected by the specific terms of the agreement. The most important terms of focus are: a) duration, b) exclusivity, and c) royalties.
Duration concerns the length of time the third parties will have the right to promote and sell your products and services. Licenses are not intended to be permanent, but endure for a limited period of time in which the licensee may promote and sell the product utilizing your intellectual property. Based on the success of the product, most licenses offer the parties the possibility of renewing the license at the expiration of the initial term.
Exclusivity of use of the intellectual property is another critical provision to consider in the negotiations process. Exclusivity addresses whether you, as the licensor, will have the opportunity to grant licenses in the work to other companies, or whether you will be limited to licensing your product or service to one party. Most commonly, the parties will agree that the license will be exclusive, but only within a limited geographic area, such as a country, region, or state, or for a specific industry.
Finally, the parties must agree on the payment provisions. The most common form of compensation in return for a license is a royalty, which is a percentage of the net sales of the goods or services that utilize the license. The calculation of royalties depends on numerous factors, including the type of products or services sold, as well as the costs involved in promoting and selling them, and typically requires sound negotiation skills by counsel on your behalf in order to reach a fair price.
If you are interested in maximizing your profits by licensing your intellectual property, be sure to consult with an experienced San Diego intellectual property law attorney. Gehres Law Library prides itself at hiring lawyers who are exceptional at what they do, have proven results, and are dedicated to obtaining the best results possible for each client. Browse our website for more information about our San Diego trademark Lawyers or contact us for a free evaluation of your case.