Intellectual Property Agreements & Licenses
Intellectual property, now more than ever, is one of the most valuable assets owned by a business. In fact, many businesses make money exclusively through marketing products based on IP rights. It is because of this that protecting intellectual property is paramount for the long term success of companies, whether it be through the use of patents, copyrights, trademarks or any other legal devices.
Once secured, many businesses find that it is more convenient or even more profitable for them to let someone use their intellectual property for a fee under a license or IP agreement. These documents which determine how a third party can use another company’s intellectual property are often complex and require careful negotiation to ensure they are in the best interests of the IP owners. Most businesses find it best to work with an IP attorney specializing in drafting, reviewing and negotiating intellectual property agreements instead of trying to handle it on their own.
Types of Agreements and Licensing
There are two basic types of intellectual property rights agreements used by companies, depending on the specific circumstances. The first of these are assignment agreements which entail permanent transfer of some or all IP rights over to another party. Generally speaking, when an assignment agreement is completed the original IP owner relinquishes all control, involvement or claims on the IP rights that are transferred.
The second type is an IP licensing agreement, which gives another party legal permission to use an intellectual property rights for a certain amount of time for a fee or royalty payment. There are almost always specific termination dates as well as procedures for handling any renewals or terminations of IP licensing agreements, which are laid out in the terms of the agreement itself.
Licensing agreements come in several different varieties, with the following three being the most common:
Exclusive License – This means the IP owner will not grant any additional licenses to any other individual, company or third party, as well as abstaining from using the IP themselves for their own purposes.
Sole License – Similar to an exclusive license in that the IP owner will not grant any additional licenses, except that the IP owner can still use the rights for themselves.
Non-Exclusive License – This allows for the granting of IP rights to the licensee, however IP owners can grant licenses to others as well as use the IP for themselves.
Agreements vs. Licensing
There is often a question as to whether an intellectual property assignment agreement or intellectual property license is the best choice. While there are benefits and drawbacks to each, in general most IP holders will want to maintain control over their IP and will choose licensing. There are many benefits to this, particularly when it comes to flexibility with different options for the IP owners, such as allowing them to determine the manner in which their licensing is used. This is particularly beneficial to startup companies and other businesses that excel in inventing and R&D work.
That being said, there are certain advantages to using an IP assignment agreement over an IP license. This is particularly true in regards to any potential liability associated with the intellectual property or products. If an IP holder sells their rights they generally will not be open to any lawsuits resulting from problems or issues related to the IP. Generally speaking, assignment agreements are most popular amongst IP holders who are selling their business or leaving their field entirely.