The World Intellectual Property Organization (WIPO) defines intellectual property as “creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce.” Businesses that own intellectual properties may decide to license their I.P.s to other businesses or individuals for a number of reasons:
– The intellectual property has outlived its usefulness to its creator or owner.
– The creator or owner does not have the resources to make the best use of the intellectual property, but doesn’t want to sell the rights to the I.P. outright. In this case, licensing would allow the product to be used without relinquishing ownership.
– The best way to capitalize on the invention or creative work is to allow businesses, groups, or individuals to use the product for their own interests.
Because of the nature of intellectual properties—I.P.s have to be unique in order to be proprietary—there are no standard licensing agreements. However, there are similar concerns among the owners of I.P. The following are some of the questions our attorneys ask all of our business clients who are considering licensing. It is in no way a comprehensive list, and any business that is considering licensing a product should contact a reputable Virginia business lawyer.
– Is the intellectual property properly protected? If it’s an invention, is there a patent? Is the book or song copyrighted? If it’s not, what is to prevent your customer from reproducing it outside the terms of the license? Will there be language in the contract to prevent theft of the I.P.?
– Is the license going to be exclusive? How many individuals or entities will be licensed?
– Can the licensee sub-license the property to others? What will be paid to the I.P. owner?
– What are the terms and limitations of the license? When does it expire? What will the licensor be receiving for the right to use the I.P.
– Can the I.P. be altered by the licensee? Who owns the modified or improved product?
– Is there are right to renew the licensing contract?
– How will disputes be resolved?
– How will the licensee secure the product from others?
Again, these are only a few of the considerations that the owner of an intellectual property needs to discuss with his, her, or its business attorney. The single most important factor in licensing an intellectual property is to make the language of the contract clear to all parties. This helps to prevent misunderstandings, as well as making the license more enforceable in the Virginia and federal courts.
