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We represent intellectual property owners interested in licensing their IP to industry leaders, and industry leaders interested in acquiring IP licenses for use in their respective businesses.
We negotiate and draft licensing agreements.
What is a Licensing Agreement?
A licensing agreement is a contractual agreement in which the owner of a copyright, patent, servicemark, trademark, or other intellectual property, allows another (known as the licensee) to use, make, or sell copies of the original. In the most simple sense, a license is a permission for a specific use.
Licensing agreements commonly are limited in the scope of the use by “Class of Trade.” For example, a T-Shirt manufacturer that licenses the right from Warner Brothers to make and sell Superman T-Shirts, would not acquire the rights to produce Superman films.
In addition to class of trade, licensing agreements should specify whether the license is an exclusive or non-exclusive right to use, and whether the licensee will pay royalties, an advance payment against royalties, flat fee, a combination, or other consideration in exchange. A common payment structure usually takes the form of a guaranteed minimum payment against sales royalties.
Licensing royalties typically range from 6 to 15 percent. However, royalties are far from “One Size Fits All” and tend to be both industry and property dependent. The licensee’s level of experience, sophistication, and uniqueness of his use may also have a significant effect on royalty percentages.
The parties may elect to use guarantees as a condition for renewing, or exercising an option on a licensing agreement. If the licensee meets the minimum sales figures, the contract is renewed, or the option is granted, otherwise, the license expires, or the licensor has the option of discontinuing the relationship.
Another important element of a licensing agreement establishes a time frame of the deal. When a license is granted with an unlimited term it is known as a “License in Perpetuity.” Today’s savvy licensors will generally insist upon a strict market release date on licensed products. Without such terms, or release date requirements, a licensee might purposefully, or even accidently “Tie up the license” which could delay or negate the licensor’s ability to exploit the work.
Commonly, licensing agreements will also address the issue of quality. The licensee has the right to play with the toys, not destroy them. A licensor is concerned that his intellectual property’s value is increased, or at least kept static, but never decreased. Therefore, licensors generally insert clauses into the contract requiring the licensee to provide prototypes, mockups, production samples, and packaging. Of course, the greatest quality control is a thorough investigation into the reputation of the licensee. We encourage and provide this unique service to all our licensor clients.
Does all this sound daunting?
Our South Florida based Business Law Attorneys serve clients in Palm Beach County, Broward County, Miami Dade County, and throughout Florida.
Negotiating and committing to a licensing agreement can seem daunting, especially in light of the fact that you’ll have to jump through all these hoops while managing your business. We understand, because our Florida Transactional Business Law Lawyers, and transactional business lawyers have been in your shoes, not only as attorneys, but as business people.
If you’re interest in learning more about license negotiation, acquisition, representation, or license agreement drafting, please contact us.
We want to hear your story and share ours.