Business Law
Business Law
Licensing & Negotiations
Licensing & Negotiations

It can be rewarding to find yourself in a position where people want to use your one-of-a-kind idea for their own purposes! Of course, it's important to protect your idea by negotiating a licensing agreement that reflects your personal and professional goals.

Legal Counsel Regarding Licensing and Negotiation

Licensing refers to the practice of granting limited rights to another party, who is permitted to use intellectual property, such as your patent or copyrighted works, subject to specific terms and conditions. Intellectual property licensing (also called IP licensing) can be extremely lucrative for the patent holder, copyright holder or trademark holder, but it’s important that you have an experienced intellectual property lawyer who can negotiate your licensing agreement in a manner that maximizes your profits, while minimizing your risks and imposing the appropriate limitations, such as restrictions on time frame, exclusivity, geographic scope or field of use.

What's the Difference Between Patent, Trademark and Copyright Licensing?

Patent licensing refers to a grant of rights in a patent or a pending patent. The United States Patent and Trademark Office (USPTO) issues patents for certain items, such as a method or process, a machine that’s comprised of moving parts and/or circuitry, a new composition of materials such as a formula for making a medication, a manufactured article, like a tool or instrument; or a novel plant variety.

Patents grant an individual exclusive rights for an average timeframe of 14 to 20 years, depending on the type of patent, so during this time, you can issue patent licenses that allow others to use your invention on a limited basis. Typically, the patent holder charges a fee for the patent license. For example, if an inventor created a new type of motor, then the patent holder may opt to license that patent to an ATV manufacturer which granted permission to use that motor in its ATVs.

Trademark usage and licensing typically involves brand protection and commercialization. If a company invests in and acquires consumer recognition for a product or service, this can translate to value to the company. Through marketing, policing of trademarks including logos and slogans, and effective productization, value can be created and expanded. The IP team at Sandman Law Office can help you to define, create and build value in your trademarks as part of an overall IP portfolio strategy.

In the case of copyright licensing, the license applies to the usage and reproduction of creative works, such as a book, a movie, a song, a piece of software or an image. Just like a patent license, a copyright license is used to grant certain, limited rights to another party who wishes to use the creative works of others (typically in a for-profit application.)

An example of copyright licensing: An artist creates an image of a new cartoon character. A T-shirt company may wish to license that image for use on its new line of T-shirts. Attorney Sandman can assist with filing the copyright for the artist as well as negotiating, preparing and defending the licensing agreement.

What Kinds of Licensing Restrictions Can I Impose?

The owner of the intellectual property is free to impose a number of different restrictions in a patent, trademark or copyright licensing agreement. For example, the inventor who holds the patent on a new type of motor may restrict the ATV company to using its motor in ATVs that are sold within North America, thereby enabling the patent holder to sell a patent license to another ATV manufacturer in Europe or Asia.

Additionally, you can opt to impose restrictions on exclusivity. So, if you issue a non-exclusive copyright license, then you would be free to issue another non-exclusive license to a different company that offers the same type of product. There may also be time-related restrictions. So, for example, the licensee may only be permitted to use the patent or copyrighted works for a span of one year.

Your IP lawyer can also help you impose licensing restrictions on field of use, which restricts how intellectual property can be used. For instance, you might allow the T-shirt company to use your character on T-shirts, but not on hats, thereby leaving you free to negotiate another licensing agreement with a hat manufacturer.

Why Do I Need Help With Licensing Negotiations?

IP licensing negotiations can be tricky due to conflicting interests. Generally, it is in the best interest of a patent, trademark or copyright holder to grant non-exclusive rights, while imposing maximum restrictions and charging the highest possible licensing fee. Conversely, it’s usually in the best interest of the licensee to minimize restrictions and negotiate exclusive rights, with the lowest possible licensing fee in an attempt to maximize return on investment.

As a result, it can be challenging to arrive at a licensing agreement, which is where an experienced business lawyer and negotiator can assist. Cases involving patent pending license agreements can be especially challenging, as there is the added risk that a patent could ultimately be rejected. For this reason, negotiating patent pending licensing agreements should be done with the assistance of experienced legal counsel. A licensed patent attorney can offer the right information to make the best deal.