In this ‘IP Tool Box Series,’ I’ll be discussing the ever useful, License Agreement. I’ll explain what it is, why it is an important tool, and why it should be considered more than just a clerical form.
What a License Agreement is:
A License Agreement, as the name implies, is a contractual Agreement that Licenses or authorizes another person or entity to use the rights of a protected Intellectual Property (IP). In a License, there are two parties, one party is the Licensor (giving party) and the second party is the Licensee (receiving party). At its base, a License is a legal contract that simply certifies the shared use of IP rights.
Many types of Licenses are used in Intellectual Property Law, including licenses for Patents, Trademarks, and Copyrights. Individual License Agreements can vary dramatically depending on the nature of the Agreement and the type of property being protected. There is, however, a standard layout and crucial content that an experienced IP Attorney can ensure is included in your License. Several components are standard, including the License term, territory, renewal, and other expectation and limitations to the use of the property.
Why a License Agreement is Important:
A License Agreement allows an IP owner to control, manage, protect and profit from their property. If an inventor or IP owner does not have the ability to utilize their IP themselves, it is crucial to the development of that IP to secure a way to manufacture the product or use the copyrighted material. Without a License, the IP could simply go unused and society would never have a chance to benefit from its use.
A familiar example of a very important type of License Agreement is the Software License, a.k.a. End User License. This type of License gives a user permission to use the IP, but it also indicates how the software may and may not be used, as well as details the users rights under U.S. Federal law. This type of License may seem like only a nuisance to the average user, but its existence allows a trust to be formed between licensee and licensor, which may not have otherwise been possible.
A License Agreement is also useful for those businesses looking to be ‘investor ready.’ One sign of an investor ready startup company is having Intellectual Property License Agreements in order. This way, the property is in condition to be transferred. Professionally executed Agreements would also let a potential investor know that the Intellectual Property they would be investing in is lawfully owned by the company or inventor. For investors, an attorney can help them to satisfy their ‘due diligence’ by confirming a seller has the rights to lawfully license their intellectual property. It is a buyer’s responsibility to ensure a seller has complete rights to license the property. In the reverse, for those licensing the rights to their intellectual property, an attorney can also help confirm the right to license.
Why the License Agreement is more than just a form:
The value of a License Agreement is in how it is written. A thorough License should do more than document ownership and use; it should acknowledge rights and establish responsibilities and liability obligations. One common responsibility that would be disastrous if missed, is the responsibility to pay Trademark or Patent Renewal/Maintenance Fees. Missing this detail would result in the licensed property lapsing and becoming unenforceable. Indemnifications are also included in a typical License Agreement. The indemnification section sites future obligations, in the case where the Intellectual Property being licensed is later found to infringe on another’s rights.
One can find and download a typical License form and complete it with limited guidance, but an experienced attorney could prove invaluable. Depending on how it is written and what legal jargon is used, a badly written License could end up costing you rights to your hard earned property. For example, in the case of a Licensee’s bankruptcy, the License could be licensed out or even sold, with no payment to the Licensor. To avoid this possibility, provisions should cover automatic termination. An attorney ensures the provisions of your Intellectual Property License are correct and give you the results you’re expecting.
Don’t leave a matter as important as your intellectual property to an online form. Willing help in the form of an experienced legal team is here and is just a call away. Please contact us if you have been presented with a License Agreement or need one to protect your intellectual property.