We prepare and negotiate intellectual property licenses for clients in Maryland, New York and Washington D.C. Our clients include business entities, photographers, inventors, writers, designers and other creators who want to profit from their work without losing control of it. Call (410) 752-9300 or use the contact form on this page.
What a license does
A license is how you make money from intellectual property you own without parting with it. The licensor owns the property. The licensee gets defined permission to use it. The agreement sets out what the licensee may do and what the licensor receives in return.
One precondition is absolute. You have to actually hold the rights, whether a patent, copyright, trademark or protectable trade secret, before you can license them. Establishing that you own what you propose to license is the first thing to settle, and it is not always as obvious as it looks, particularly where work was created by contractors or employees.
The terms that matter
Most licensing disputes we see trace back to a term nobody negotiated. These are the ones worth spending time on.
Payment
A licensor may be paid a flat fee, a running royalty on sales, an advance against royalties, or some combination. Royalty rates vary widely by industry, by the strength of the rights and by what the licensee is bringing to the arrangement. There is no standard rate, and anyone quoting one should be asked why. What matters more than the number is that the method of calculation, the base it applies to, the reporting obligations and the audit rights are all unambiguous.
Duration and termination
How long does the license run? Fixed term, renewable, or perpetual? Then the part people forget: what ends it early, what happens to inventory and sublicenses on termination, and what survives it.
Scope
Most of the value sits here. Exclusivity comes first, meaning whether the licensor may license the same rights to others or to nobody. An exclusive license is worth considerably more and should be priced that way. Territory follows, whether that is one state, the United States, or worldwide. Field of use sets which products, markets or media are covered and which are reserved. Sublicensing decides whether the licensee may pass rights on, and on what terms.
Quality control is not optional for trademark licenses. A licensor who fails to control the quality of goods or services sold under the mark risks the very rights the license was meant to exploit.
Indemnification and confidentiality
Who bears the risk if a third party claims the licensed property infringes their rights? What confidential information changes hands, and how is it protected? See our page on confidentiality agreements.
When a license goes wrong
Copyrights, trademarks, patents and trade secrets are often among a business’s most valuable assets, and a breached license can be an immediate revenue problem. Unpaid royalties, use beyond the agreed scope, or continued use after termination.
Where a licensee has breached, acting in reasonable time matters. Litigation can recover what is owed, and it does something else worth weighing. Enforcing your rights once tends to make the next licensee take the terms seriously. Our attorneys have represented artists, musicians, photographers, authors and other creative professionals in licensing disputes, including obtaining a substantial federal jury verdict for a copyright client. For examples of the firm’s work, see Jan Berlage’s representative matters.
Before you sign anything
A license can be a straightforwardly profitable arrangement for both sides, or a source of years of dispute, and which one it becomes is largely decided at drafting. If you are being offered a license, or about to grant one, have it reviewed first. Call (410) 752-9300 or use the contact form on this page. See also IP strategy and due diligence.