We routinely draft Confidentiality and Non-Disclosure Agreements, Work for Hire Agreements, Licensing Agreements, Contracts for Sale of IP Asset, and Assignments.
Many people know 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.
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. You must properly document the relationship so that it is clear who has ownership of the IP rights in the partnership. Holders of Intellectual Property, including all partners, 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.
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.