An organization’s intellectual property may be among its most valuable resources. Trade secrets generally need to remain private in order to continue providing a competitive advantage.
Patents, trademarks and copyrights offer a bit more flexibility. It is possible to share access to or use of these common forms of intellectual property with another business or an outside creative professional. Licensing agreements are what allow musicians to sample beats or lines from older songs.
They allow a computer company to manufacture a patented microchip or one company to use another business’s trademarked logo as part of a marketing campaign. Licensing agreements can be beneficial for businesses with in-demand intellectual property.
How licensing agreements can help
There are three primary benefits associated with the execution of a licensing agreement for intellectual property. The first is a new stream of revenue, as the company requesting the licensing agreement must pay to use intellectual property that belongs to another organization. Generally speaking, payment may involve a lump-sum single-time payment or could require payment on a per-use or recurring basis.
The second benefit is the prevention of infringement. Allowing interested parties to access certain protected intellectual property lawfully can prevent them from trying to do so illegally and in secret.
Finally, licensing agreements help protect the party that owns the intellectual property or holds the rights to it in the event of a dispute. The agreement can outline the expectations and requirements of both parties and provide the basis for financial compensation after infringing activity occurs.
Business leaders often need help drafting thorough and enforceable licensing agreements for their intellectual property. Partnering with a business law attorney may make it easier to navigate potentially risky business transactions and concerns.