The term “intellectual property” refers to intangible property such as art, music, literature, movies, inventions, designs, slogans and logos. Under IP law, you have the exclusive right to use or reproduce your work. In some cases, you may wish to allow others to use it. In order to maintain control over and protect your intellectual property, you should create a license agreement.
A license is a contract that allows you to make a profit by granting permission to another party to produce and sell goods, to use a trademark or patented technology, or to display work for a fee or other consideration. Once you have decided to issue a license, you will also need to decide how to handle the revenue that is generated. Common fee arrangements include royalties, advances, monthly lease payments, or one-time fees.
The next step in creating a licensing agreement is to determine the scope of permitted use. The rights assigned by a license are limited use rights; therefore, you should decide how you will allow a licensee to use your property. For example, can they reproduce your work, display it or resell it? Can they modify it or combine it with another work? Scope also addresses such matters as geographic limits (e.g. granting rights to sell overseas or only in the USA). In the case of computer software, an agreement can stipulate the number of computers on which software may be installed.
In order to afford you the best protection, a licensing agreement should be thorough. Other topics that you may want to address in your licensing agreement include:
- Term (time frame of the agreement)
- Renewal options
- Exclusivity, transfer and sublicense rights
- Nondisclosure of confidential information
- Rights to modify and/or combine with other products
- Allowable vs. prohibited uses
- Quality control
- Source code rights
- Warranties
- Limited liability
- Indemnity for infringement (and remedies)
- Termination of contract
In the event that someone attempts to infringe upon your IP rights, a license will allow you to file suit to enforce your rights and to seek monetary damages. Intellectual property is a valuable asset; protect it with a licensing agreement.