Lesson 1: IP Licensing
An IP licensing agreement is a contractual arrangement between the owner of IP (the licensor) and a third party (the licensee), where the licensor grants the licensee permission to do certain defined things with the licensor’s IP.
Business factors that might influence whether to license your IP rights instead of retaining entire control yourself include:
- wanting to enter into the market of a foreign country, where it may be easier to license a local licensee;
- not having sufficient manufacturing capacity;
- not having the expertise required to exploit your IP rights effectively;
- wanting to generate a source of revenue;
- wanting to enhance the perceived value of your IP as an asset for the purpose of an acquisition or financing; and
- using a cross-license as a means to reduce your liability to someone who is or could assert their IP against you.
There are certain basic principles you should consider when entering into a license agreement. These include the following, which are intended as suggestions only.
As always, it is advisable to seek expert help in drafting or reviewing a license agreement.