One of the rights acquired by the owner of intellectual property is the right to license the invention to a third party. A variety of intellectual property creations can be licensed, including patents, confidential knowledge and copyrights. Licensing provides entities that produce technologies with a source of revenue while maintaining some degree of control over the invention that would normally be transferred in the event of an outright sale.
What is a license? A license is a contract for the use of a product in some particular way that is agreed to between the parties. The licensor is the owner of the invention/product and the licensee is granted authorization for use. The licensor’s product is generally not permitted to be used barring the grant of a license because the product is a trade secret or legally protected by some legal mechanism, such as a copyright or patent. A license is designed to transfer at least some of the rights associated with the property to another party under specific conditions. A license should be distinguished from a sale; in most cases, a licensor continues to have certain rights to the licensed product. Sometimes, however, a license may rise to the characterization of a sale because of the broad rights that are granted to the licensee.
What types of licenses are available? There are many types of licensing agreements available to those who want to license their products. Products or inventions that have been granted a patent, copyright or trademark may all be subject to licensing agreements. Similarly, trade secrets can be licensed through an agreement. Licensing agreements can broadly be divided into two categories: exclusive and non-exclusive licenses. An exclusive license prohibits the licensor from granting licenses to other parties or from using or engaging in the invention unless stipulated under the agreement. In a non-exclusive license, which is more common, the licensor is generally allowed to make use of the licensed invention and/or grant rights to others to practice the invention.
What is the goal of licensing? Licensors have many different reasons for deciding to license their intellectual property. Licensing a product offers opportunities to expand into new markets that the licensor may not have been able to access. Granting a license can generate income by providing entry into new geographical areas and market categories, and simultaneously lead to increased brand recognition. In addition, licensing intellectual property provides the licensor with a stream of royalty payments, which can be significant in some cases.
Contact Shane Coons at 949-333-0900 or visit his website at www.ShaneCoonsLaw.com to find out more about his practice.