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Have you invented or created something that you want to publicise and commercialise? After investing your time, money and expertise, it's not surprising that you want to ensure that your intellectual property (IP) remains protected from infringement and exploitation. However, you also need other businesses to bring your ideas and works to market or to provide a source of revenue for your business.
That's where a Licensing agreement (IP) comes into play. This guide will cover the basics of a licensing agreement and how you can get one started for your business.
A Licensing Agreement (IP) is a legal document where the licensor (Company A) grants permission to the licensee (Company B) the exclusive or non-exclusive use of its intellectual property. In return the licensee pays the licensor a royalty or fee.
The agreement also outlines the licensor's terms for how the intellectual property can be used.
Licence agreements (IP) are commonly used by businesses, inventors, artists, writers, designers and others, for things like patents, logos, products and copyrighted works.
There are a few factors that come into play when you're deciding whether to use a licensing agreement (IP). These include legal, financial and personal factors. Some of the key considerations when deciding whether you wish to enter into an agreement include whether you:
A licensing agreement gives you ownership and control over your intellectual property and protects your works from being infringed upon or exploited by other people.
In some cases, you may want to commercialise your IP but don't have the financial means or expertise. A license agreement can monetise your ideas or works on a greater scale. For example, a celebrity may enter into a non-exclusive licence agreement with a game developer for the use of his or her trademarks and copyright images.
In other cases, licensing agreements may be a core component of your business model and revenue. For example, a software developer may set up license agreements with their clients for the use of their proprietary software.
A licensing agreement is used when the licensor is granting permission for someone else to use the IP, but ultimately wants to retain the full rights to their property.
On the other hand, in an assignment agreement (IP) the creator gives away, or 'assigns', all of their rights to their work and ongoing royalties.
Here is what is included and not included in a standard licensing agreement (IP):
Whether it is a trade secret, copyright or patent, your IP is the backbone of your business and it is important that you are able to protect and harness its economic value.
A licence agreement that is well-drafted is critical to the effective protection and commercialisation of your intellectual property. Not only does it provide the licensor the chance to terminate the agreement if royalties are not made, but also spares the hassle for both parties to go to court. On the upside, an agreement also provides financial benefits to both parties if successfully commercialised.
While there are free licence agreement templates you can use, we recommend that you contact an IP lawyer to help you draft and review your agreement. An IP lawyer can assist you in a number of ways right from the start, including:
It is best to consult with an IP lawyer who can help you draft the agreement. As above, a licensing agreement (IP) includes the key sections below:
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