We routinely draft Confidentiality and Non-Disclosure Agreements, Work for Hire Agreements, Licensing Agreements, Contracts for Sale of IP Asset, and Assignments.
Everyone knows that they should contact an attorney when it comes to contracts, but many people think that some situations are so simple that they can save money and come to an agreement themselves. They may feel that they trust each other and are not worried about getting paid, and so on, but getting paid is only part of the story.
When it comes to Intellectual Property, there are many ways a do-it-yourself approach can jeopardize your IP rights, and you should especially contact us for a free consultation. If the situation warrants it and we feel you can save money and do it yourself, we’ll tell you. But we will first inquire about all the relevant factors to determine if that is safe. If you need our help, we will offer you an affordable solution that protects your Intellectual Property.
Another factor many people don’t consider is, what happens if the relationship sours? Two parties may begin by sharing an IP right, thus sharing in the cost of obtaining the right or in implementing the market solution, based on the confidence they have in the relationship because of their current situation, their good business relationship, and shared goals, perhaps being in a stable, ongoing business relationship. But situations sometimes change unexpectedly, and former friends or close business associates can part ways – then who controls the IP rights? Foreseeing this potentiality and providing for a fair and orderly disposition of assets, or maintaining a single source of control in a written contract, is vital.
The money is only one part of the question. More important is continuity of the IP rights themselves – ensuring nothing will happen that jeopardizes the validity of the patent, trademark or copyright in the future, which can easily happen whenever two parties are going in different directions in implementing their IP rights.
For example, any time you give a third party a share in your IP rights, whether it is allowing them to reproduce your patented invention, or using your trademark or copyrighted work on their own products, there is a chance that your rights may be diluted, or quite possibly, your IP rights can be invalidated without your knowing that this could happen. This is because holders of Intellectual Property are required to control the relevant products or services to ensure they adhere to the restrictions in the patent, trademark or copyright. If adequate controls are not in place, other third parties can claim, justifiably, that you failed to police your IP rights in the case of your partner, and so you have lost the right to prevent others from using it as well. You must first of all, properly document the relationship so that it is clear that you retain control of the property.
Trademarks present a unique problem in that they serve to identify the source of the product or service as being the holder of the mark. If another party sells similar products or services, even if they are otherwise properly displaying the trademark, another third party may claim that the trademark has ceased serving as a source-identifier, since the product or service may be coming from more than one single source. This evidence can be used to have your trademark cancelled.
Some people casually apply for their own trademarks as joint applicants without realizing that they risk a similar charge of “more than one source” unless they properly document their relationship and show that there is a single source of the product or service and that that entity is properly in control of use of the mark. Even with a proper agreement, joint ownership of a trademark can be problematic, and so we usually advise our clients to consider licensing the use of their IP rights instead.
We have a great deal of experience in crafting licensing agreements involving Intellectual Property, both on behalf of the owner of the IP rights, the licensor, and on behalf of licensees.
You may consider whether to enter into a partnership or joint venture agreement, or to simply license your IP property either exclusively or non-exclusively.
It is important to carefully consider the extent of the rights you will grant. It may involve simply using your brand name, in which case there are several important protections that must be built into the agreement to protect your brand. Similarly, if it is a design that is being licensed. If a patent is involved, you must decide if you are granting rights to manufacture, including developing improvements (and who will own the improvements?), rights to advertise and sell products or services, and whether it is only a part of your patent to which you are granting rights. The use of confidential or trade secret information is also an important area to consider in building in protections of your IP in any agreement.
As you can see, it is very important to consult with a lawyer early in the process of engaging with a third in any kind of licensing arrangement, so that you do not lose any negotiating points early in the process, before you bring a lawyer on-board. And to consider accepting a form of agreement from the third party without consulting with your own lawyer is inviting trouble, perhaps even endangering your IP rights, which can be threatened by third party activities if not controlled by a carefully constructed agreement with realistic enforcement terms.
We would be happy to offer you an initial free consultation to help you in your thinking about any kind of IP licensing agreement.