Are you considering licensing out anything you own but aren’t sure what types of licensing agreements exist? Licensing intellectual property (or “IP”) can be done in various ways. You must first comprehend the many forms of license agreements available to do so.
We’ll go through what a licensing agreement is and how to choose the proper one for you.
Types of licensing agreements
A licensing agreement is a method of monetizing intellectual property such as a patent, copyright, or trademark.
Intangible property is the term for this (IP).
The licensor, or the person who owns the intangible asset, receives a fee for allowing a licensee to use or promote the IP under this arrangement.
There are many various types of licensing agreements based on different types of IP like there are many kinds of real estate.
To establish a successful relationship, you must employ a cooperative agreement.
Otherwise, you risk losing money and maybe more.
A partnership is formed via a license agreement.
It will include how the partners enter the agreement, what each partner agrees to, and how you can exit the arrangement.
Trademarks, technology, and trade secrets are among the most regularly licensed items.
Often, these agreements will cover many types of intellectual property.
There are some commonalities in many agreements, but there are also some substantial distinctions.
A company will use a license agreement to protect and utilize its intellectual property.
It is a mechanism for a company that uses its intellectual property, whether it be a copyright, patent, or brand name, to spend intellectual capital while maintaining control.
This arrangement allows the licensee to receive something of value that they cannot develop but may have the expertise to earn money.
A licensee is distinct from a service provider such as a vendor or contractor.
Licensing is the process of providing certain rights to intellectual property.
While all licensing programs are unique, certain similarities may be seen in specific areas of licensing due to the way they are organized.
Licensing may be seen as a collaboration between firms who require each other’s assistance, most commonly in the form of IP use.
Types of Intellectual Property Licensing
Types of licensing agreements for intellectual property may be:
Non-Exclusive vs. Exclusive
An exclusive license offers the licensee rights to the licensed IP in exchange for the owner’s promise that equivalent rights will not be granted to anyone.
The IP can be licensed to others under a non-exclusive license (like the license to a mass-market software product)
An exclusive license is akin to an assignment of the IP in spirit since it provides some protection to the licensee from rivals.
Any rights that the licensor chooses to keep, such as internal usage or R&D rights, may be specified in the agreement.
IP rights can be divided and distributed based on a variety of factors, including geography, duration, and field of use (type of customer, type of product).
A license nearly usually has limitations on the licensee’s use of the IP, such as field of use, territory, a defined consumer group, temporal scope, and so on.
As one of the types of licensing agreements, Patent licenses provide you access to a patent or application throughout the patent.
Know-how licenses provide licensees access to a licensor’s knowledge, such as process trade secrets, so that they can develop a product or service more quickly.
Hybrid licenses provide a combination of IP rights, such as know-how and patents, including stipulations standards in various types of permits.
Types of licensing agreements: Trademarks
Trademark licenses offer the right to use a brand. Still, the licensor must maintain control over the quality of products and services carrying the trademark, or the trademark will be lost.
Licensing of Copyright
The IP world’s artwork is copyright.
Copyrights occur in works of visual art such as paintings, movies, and music, for example.
Characters like Mickey Mouse have copyrights as well.
Copyright licensing agreements, like trademark licenses, are frequently utilized for consumer goods.
They’re also utilized for distribution agreements, like musical compositions or films.
Types of licensing agreements: Licensing of Trade Secrets
Trade secrets are one-of-a-kind in that they aren’t filed with the government.
When patents, trademarks, and copyrights are registered with the federal government, they are valuable.
Only the confidentiality of trade secrets protects them.
The formulae for Coca-Cola and the recipe for KFC chicken are two of the most well-known instances of trade secrets.
Non-disclosure clauses are frequently included in trade secret licensing agreements or NDAs.
NDAs say that the person who receives sensitive information cannot disclose it to anybody else.
Who Needs a Business License?
Many parties can benefit from a license arrangement, including:
Professional sports teams, for example, have valuable trademarks such as their name and emblem.
These overworked teams lack the time or competence to develop their goods.
They will license their trademark to numerous firms to make items, and those companies will pay them a royalty.
Actors and actresses can license their likeness for various things, including dolls, perfume, and other items.
Characters: Characters from television and movies can be licensed for usage on greeting cards, toys, and clothes, among other things.
What is the process for obtaining a license?
- Create a strategy:
Create a corporate strategy based on your business objectives, and utilize IP as a tool.
If licensing your IP is a component of your plan, select which IP you want to preserve and which you want to license.
- Determine who could be interested in becoming a licensee:
- Identify the following license terms:
Inline with your business objectives and likely to be accepted by future licensees
- If obtaining intellectual property is part of the plan:
Decide the IP address you’ll require.
Make a list of possible licensors.
- Identify the following license terms:
Inline with your company’s objectives and likely to be acceptable to potential licensors.
Implement the strategy using best business practices.
Prospects should be approached.
Negotiate terms and put the agreement into action.
Follow through on commitments.
Read More: What is Patent licensing? – from A to Z