Licensing of intellectual property and drafting a non-exclusive or exclusive license can be overwhelming. Without knowledge of copyright law, licensing terms (that often constitute a licensing agreement) can be quite confusing. Indemnification, commercialization, jurisdiction, perpetual, warranties: the list is endless. Oftentimes, what is implied and expressly stated in daily conversations shall mean differently in a licensing deal.
Licensor and licensee
A licensor is someone granting rights, be it for intellectual property or certain licensed products. Meanwhile, a licensee is someone wanting to make use of another’s intellectual property rights, often for a certain period. What is allowed and prohibited by copyright laws should be taken into account, regardless if you are licensing rights or would want to license rights. Since it is a legal agreement, people can sue you for problems arising from invalid license agreements, or if they are not under all pertinent statutes.
What is a license agreement for
The word license has two uses that shall not be confused with one another: one more commonly used (such as in driving) and another for IP licenses. Individuals or companies opt to grant the latter to any party who agrees to the terms and conditions of the licensing contract.
Licensors often grant a license for:
1) Technology, such as computer applications or making commercial use of a patent for the reproduction of certain products governed by a license grant
2) Intellectual property, such as trademark, copyright, or other intellectual property
A company with a good patented product that has no means to reproduce, and eventually distribute, the said product will benefit greatly from licensing. You may, for example, have rights granted (be it non-exclusive or exclusive rights) to someone else who has the means to use patents you own in their manufacturing or production.
Here, the owner of the patent grants or ‘sells’ the right and license to use that process to the other party (that he or she has negotiated and came to an agreement with). This is in exchange for either a fixed license fee or a variable royalty that depends on net sales.
Licensing intellectual property
One cannot talk about licensing without specifying its connection with patents, trademarks, or copyrights. Trademark licenses are discussed (and eventually sold or granted) through negotiation and a trademark license agreement.
A copyright license, meanwhile, involves the right and license to use a copyrighted asset. This also includes derivative works of the original copyright owner, which could be seen in licensed public performances of a derivative work. Meanwhile, patent licensing involves the rights to produce, sell, distribute, or even redistribute a patented product. These must comply with the terms set in a patent license agreement.
Licensees are expected to exercise diligence to ensure that they are licensing rights from its actual owner. You could be negotiating on a license agreement with a third party pretending to be the owner of the rights, which is against the copyright act. This happens from time to time, and those involved are made liable pursuant to license and IP laws.
Before you create, distribute, terminate, or sign any licensing agreement, make sure that the licensed rights involved are under all aspects of the law. Furthermore, if you want to know what the terms sublicense, end-user, confidential, proprietary, infringement, and termination means in the context of licensing agreements, contact our competent lawyers at War IP Law for assistance.