Historically, the United States has placed high value on protecting a person’s original work, going all the way back to when George Washington signed into law the Copyright Act of 1790. The first work registered under the copyright law was a spelling book written by John Barry. Today, Intellectual Property takes many forms, such as trade secrets, operational knowledge, registered designs, or proprietary information, just to name a few. The laws have adapted to reflect the changing times, but copyright and licensing remain important protections for innovators.
The Purpose of Licensing
Creating original and marketable intellectual property requires a unique set of skills, but those skills don’t always include the logistical ability and business acumen required to fully monetize IP. For that reason, innovators may prefer to license their IP to maximize monetary value. Licensing the product means that the creator or owner, now the licensor, will receive money for their IP while the licensee is tasked with use, production, marketing, and distribution.
Requirements of a License
Like other contracts, the license will define the terms of the agreement, such as the timeframe and requirements about selling, redistributing, or otherwise sharing the intellectual property. Sample licensing agreements available at SEC.gov. reflect other important terms, including
- The rights and terms of the rights being granted;
- Compensation and consideration that the idea’s author will receive;
- Records, reports, and warranties; and
- What constitutes infringement and how that infringement will be addressed.
The relationship between the licensor, and the licensee will likely change over time reflecting the success of the partnership, or lack thereof. While on-line templates are available on-line, seeking the advice of an experienced business attorney will ensure that the Intellectual Property License best meets the needs of everyone involved.
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