IP Licensing Agreements: The Basics

Could your business make money by using licensed characters or intellectual property (IP)? Imagine sports teams, sci-fi and movie characters, or TV characters, adorning your product or your website or on the items you sell. Instant recognition and popularity can translate into sales.

The problem of course is that you don’t own any of that IP, and if you just use it, you can expect a cease and desist letter—or worse, an infringement lawsuit.

Licensing Agreements

But a licensing agreement can allow you to have the best of both worlds. A licensing agreement is where you get permission to use someone else’s IP (or, if you own the IP, you give someone else the right to use what you own), for a specific time or purpose or use.

Many people think that you can only license any IP that is registered, such as patents, trademarks and copyrights. But you can license non-registered IP (which usually are considered trade secrets by the owner). These kinds of licenses however, are often harder to get.

Initial Permission

For any large company, they will want to see that you are protecting their brand or IP that is being licensed.

That may include staying true to the characters or trademarks, but also, the quality of the products you are attaching to their IP. The IP owner will also want to make sure that your company isn’t facing any legal problems or breaking any laws—they don’t want their IP associated with that, understandably.

If someone who owns IP is willing to talk with you, there are terms that will have to be agreed upon.

Exclusivity

One term is whether your license will be exclusive or not.

If you are getting a license, from say, Disney, to use Star Wars characters, you clearly won’t have an exclusive license. But you could have an exclusive license in your niche area—so, if you were to get a license to use the character, you won’t be the only one who can use Darth Vader’s likeness—but you could be the only one who can put his likeness on a workout towel or a toothbrush holder or some other specialized product.

Your license could be exclusive as to geography, or a limited region, or for a specific purpose, such as sales at a particular type of event, or only at a particular type of store or sale or retail outlet.

How Much is Being Licensed?

Think about our example above, the license for Darth Vader. Does that also include the other characters in Star Wars? Does it even include the Star Wars name or titles? Remember that IP often comes alongside other IP, but they are separate—a license to use a character is not a license to use all aspects of the IP surrounding or related to that character.

Termination

Can the licensing agreement be terminated by the owner, and why? And if you’ve put significant money into licensed products, you’ll want to retain the right to sell what you have already bought, stocked, inventoried or made, even if the license has been terminated by the IP owner.

Call the West Palm Beach business litigation attorneys at Pike & Lustig today.

Sources:

linkedin.com/pulse/ultimate-checklist-review-license-agreements-like-pro2023

atioalliance.org/blog/16-09-2022-licensing-agreements