7 steps to consider before licensing intellectual property agreements

7 guidelines to being prepared and protected when it comes time to create and implement an IP licensing agreement.

When drafting and signing agreements regarding licensing or claims against intellectual property, there are a number of elements that must be considered to ensure the right measures are being taken. A recent Supply Management report explores best practice tips to protecting your intellectual property when licensing. Here is a breakdown of the top seven guidelines.

Be specific. 
Trademark licenses can be complicated since they include the ability to grant limited rights to the appropriate parties. Therefore, the language used in trademark agreements needs to be very precise and detail who and what those rights entail. Enlisting in the help of your legal team will ensure that you are not leaving any important details out and are always protected against future claims.

Site examples. By including specific examples of the businesses that the license is intended for and equally importantly, unintended for, you can eliminate the chance of confusion down the road. The more information you can provide the better, to mitigate risks and legal issues down the road with companies who may have misunderstood your licensing agreement.

Chose the right wording.
 As with any legal agreement, its important to eliminate any commonly used phrases that can appear vague or unclear in your trademark policy. This is particularly important in regards to verbiage in relation to time. Avoid any wording that can be interpreted as too general such as “from time to time” or referring to times of the year without being specific to the exact month or date.

Determine what licenses are necessary. It is important that your licensing agreement is straight and to the point, free of any ambiguity. For example, Supply Management notes that if the licensee seeks an “exclusive” license, question whether granting an “exclusive” license excluding all parties is actually necessary.

Weigh anti-competitive risks. 
Confirming whether or not your license is anti-competitive is imperative to solidifying your agreement. By weighing your competitive risks early on, you eliminate the possibility of dealing with trademark litigation down the line. Keep in mind that the greater the degree of license exclusivity, the greater the risk that the license may be anti-competitive.

Evaluate the business strategy. Any legal and binding contract should be closely evaluated at the strategic level depending on the goals and objectives of a business before any paperwork is signed, but you’d be surprised how many organizations forgo that step in the preliminary stages. Use what you have learned in the past about your business to plan for now, but more importantly, plan for the future, by considering and including any other groups or companies that may be on the horizon for trademarks and licensing down the line.

Control IP development.  Possibly one of the most important tips on this list revolves around maintaining control of the actual development of your intellectual property before licensing the agreement even begins; this can be done by adopting an IP policy to control how the IP is integrated across an entire organization.  By implementing this policy, companies can take an organized approach to their intellectual property rights with minimized risks. IP policies lock down standard terms, royalty rates and greater consistency for third parties.


For related news on Intellectual Property and Licensing, read these recent reports on Inside Counsel:

Technology's disruptive effect on copyright law

Patent trolls invade the cloud

Privacy, data and different jurisdictions: Examining differing requirements across the U.S.

IP: 3D printing patent litigation now: The shape of things to come?

Contributing Author

Stefanie Mosca

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