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if your company's like most companies fortunately most of your IP activity is going to be licensing not litigation that's a good thing what is licensing well a license is essentially an agreement between the licensed or the owner of Technology and the licensee the company that wants to use that technology so they enter into an agreement whereby the licensee gets the rights to use the technology and the license or gets something maybe money maybe something else in a technology context licensing really involves business considerations technical considerations and of course legal considerations and you really want to make sure at the very beginning you know what success looks like in all three fronts know what your objectives are when you're licensing one thing to keep in mind it's very important flexibility flexibility flexibility the hallmark of licensing is flexibility there is so much you can do to change the deal that you can almost always find some kind of a solution that works both for the licensee and for the license or you can change the duration of the license the scope of the license the payment process is a lot you can change and you can bring in other factors perhaps a supply deal is in the works you may not simply lightson somebody's technology you may license their technology and sell them something or buy something from them all of this can be worked into an overarching deal that works for both sides an early question in almost every license negotiation is the price the truth is the price is typically finally settled at the end of the licensing negotiation in my experience all the other terms of the deal impact the price so until you have those negotiated you really don't have comfort that you know what the price want to be it's a hard question it's a business question really at the end of the day there are factors that you have to take into account and they're the ones that are intuitive to you really your technology is not worth more than the cost of the next best alternative if they've got another alternative out there that is as good or almost as good they might pay a premium for your technology but not that much if there's no other game in town you might get a big premium for your technology there are some rules of thumb you might have heard that the license or gets a quarter to a third of the profits don't rely on them they're not a bad starting point but they're not reliable it really comes down to who's taking the risk who's making the investment who's in a position to take advantage of the technology if you're licensing technology into your company and you're going to spend money in time and effort creating the marketplace for that technology you're taking a big risk setting aside the cost of the royalty you're taking a big risk with your company's resources so that goes into the equation of course the license or has already invested in developing the technology that they're licensing that goes into the equation too everything goes into the equation try to think of what you need out of the deal have in mind for what the other side needs out of the deal - it's all well and good to demand everything on your side that's really a path to an on deal if you want a deal have in mind your needs also have in mind the other side's needs remember the hallmark of Licensing is flexibility licenses come in a lot of different flavors and this is good this gives you some opportunity to craft a license to your particular deal to your particular needs for example there are licenses that are exclusive there are licenses that are non-exclusive and there are licenses halfway in between let me tell you what I mean an exclusive license means that the license or the one licensing the technology out will not license anybody else to use that technology and won't even use it themselves a non-exclusive license is one in which the license or can license any number of different licenses you may have a non-exclusive license and your competitor may also have a non-exclusive license to the same technology someone in between these two is sometimes referred to as a sole license with a license or will license you the licensee will not license any other licensees but has the right to continue using the technology themselves another aspect of flexibility in the license agreement is the field of use your company has a focus on a certain area of Technology a certain market segment you may not want to pay for or need a license beyond your particular field of use the license or will license you exclusively are not exclusively in that field of use and then separately license other people in different fields of use having nothing to do with your market space that works for the license or it works for you you pay less and the license or gets to exploit the technology in other fields with people who are appropriate to those other fields another aspect of Licensing flexibility is the duration of the license not all licenses are permanent some have a fixed period of time a year a month ten years whatever it might be that's fine if you're a licensee in that situation with a fixed period of time license make sure that it's long enough you do not want to have to go back to the license or typically to renegotiate because of course by that time you've baked the technology into your platform and the license where knows this the price of Poker may go way up get the license long enough to cover your entire need it could be a simple royalty I will pay you $1 for each unit of product that I sell straightforward pretty common but there's a lot of flavors ease you can imagine you might instead for example have an upfront payment of a certain amount and pay no more that's it I'm done I've paid you a million dollars I will never pay you another dime I've got a permanent license fine not very usual but not uncommon and anywhere in between here for example a lot of licenses have a cap on the amount of royalties that are payable in any given year or a cap on the total amount of royalties under the life of the agreement for example I'll pay you $1 a unit but by the time I've paid you $1,000,000 whenever that happens I am done I will pay you no more and my license is now permanent not uncommon have in mind all of this flexibility in negotiating the payment terms because if you're a smaller company you may have cashflow problems at the near end and expect to have no cash flow problems later push the payments out as far as you can it'll work for you if the license or has sufficient financial muscle they'll be happy to accommodate that along with the right to use technology you may want to negotiate some technical assistance remember the license or has technology in this area they've been working in this area they know it you know it better than you do probably so you may want to negotiate for some technical assistance that might mean they make someone available on a phone it might mean that they put people into your facility for a short period of time to help it get you up to speed to help get you up and running on the use of the new technology that you've just licensed in from
Thanks for your comment Isabell Camejo, have a nice day.
- Man Achor, Staff Member
all right let's cover a topic that i often see get confused in agreements that we work on for clients i'm going to talk about intellectual property ownership there are really that's a little bit of a misnomer i'm going to talk about ownership and then also licensing because those are the two competing ways that intellectual properties should change hands under the terms of an agreement so ownership when you assign ownership also commonly referred to as work for hire however they're kind of whittling away what work for hire means so you should have language that assigns ownership of intellectual property if you wish to give ownership in an agreement so if you wish to just give the intellectual property any content that you create any creative work and by ownership i mean you give it to the other party you no longer have any rights any control you relinquish all of that to that other party that's giving ownership or assigning ownership now a license is different a license is where you provide permission to use in a limited capacity for a limited time maybe in a limited geographic region and for a limited purpose the intellectual property the creative work but you maintain the right to revoke that license you maintain control over it you can go use that creative work other other places whatever you want to do with it because you own it still you haven't given ownership of it over to someone so you can kind of think of a license like letting people borrow that intellectual property that creative work so a lot of the time you might see photos in articles or blogs that were licensed for the use in that article or blog but that photographer still owns that photo they can then sell it to national geographic or license it to others whereas if they assign ownership which is typically what you would see in maybe like a wedding photographer contract if they're shooting your wedding you would want ownership of the images of you and your family and your friends from your happiest day ever and so that would be where assignment of ownership should be present in that wedding photographer's agreement now this isn't as clear as it sounds in the language of an agreement because it's not as easy sometimes to decipher what a license versus an assignment is in a contract because the language can be rather verbose it can be a lot of language it can be confusing words like revocable in perpetuity and in the universe and all of these different things that may be obscure whether it is a license or it is ownership being assigned but it is tremendously important not only for you if you're someone that's a creative professional but also the person that's hoping to receive ownership of your branding or your photos whatever it may be you need to make sure that that intellectual property provision in the agreement is spelled out correctly and provides either the license or the ownership like you desire it to because if it doesn't you're in a totally different scenario and also for creative professionals out there you should be charging more for ownership than you should be for a license because they're getting the whole kitchen and the kitchen sink or whatever they're saying and they get to do whatever they want with it versus a license where there's limitations and you can revoke it so those should be different costs in my mind that's what i recommend at least and so it's super important to make sure that you a know what type of ip ownership or license you'd like to see for whatever engagement you have a contract for b that it's spelled out correctly and reflects that desire that you have in the agreement and of course that the parties understand which is which so that one doesn't think they're getting ownership but they get a license or vice versa that's important can avoid some disputes that way and also keep in mind that whether or not you assign or license is relevant to if you have an independent contractor or if they have an end client so let's say you have a contractor that provides you with some creative work but they only gave you a license and you're giving ownership to your end client you don't have ownership to give if you only got a license from that contractor and that can cause issues additionally if you then are going to go to your end client and give ownership and you didn't get ownership definitely a problem for you and you're not going to be able to save face there with your end client if the contractor comes out of the woodwork and tries to claim that also additionally if you license someone to your end client and they expected ownership and that was never discussed that could be a problem and also all of this dovetails into whether or not someone can register a trademark a copyright a patent in the creative work that is the subject of the agreement if someone only receives a license and they go to register a trademark a copyright a patent chances are they can't and they may even get in some trouble by the original artist because they didn't have the right to register that and registrations are public records so the other person might find out about it so intellectual property ownership ownership of creative work license and ownership assignment of ownership those are the two main ones there are some nuanced versions and kind of like hybrid versions that you can get into but it's important to make sure you know what you want going into the contract and that the contract accurately reflects it and that both parties to the contract understand what's in there to avoid disputes to avoid issues to avoid headache to avoid having to hire me a lawyer although you know i want to work with you you can hire us we're affordable we're fun but if you don't need us you don't need us and if you know what you're doing in these regards you don't need us so hope this was helpful hope it helps you avoid some situations that aren't so fun thanks for tuning in
Thanks FoitL your participation is very much appreciated
- Man Achor
About the author
I've studied library at Kentucky Wesleyan College in Owensboro and I am an expert in natural resource sociology. I usually feel disappointed. My previous job was outdoor education teacher I held this position for 27 years, I love talking about weight training and diorama making. Huge fan of Davina McCall I practice triathlon training and collect vintage cars.
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