By: Jeffrey G. Sheldon, Esq.

If you need to negotiate a license agreement for intellectual property (patents, trade secrets, trademarks and copyrights), the starting point is the business terms. Although the legalese is important, there first there needs to be a meeting of the minds between the licensor and the licensee. So what do we consider the key business terms to be? They include the following:

  1. What rights are received by the licensee? (make, have made, sell, export, import, sublicense)
  2. What products/processes are licensed?
  3. What is the field of use?
  4. Is the license exclusive or non-exclusive license?
  5. What territory (the entire world or just certain countries or part of countries)?
  6. What is the royalty base (dollar sales, units produced)?
  7. Royalty rate on the royalty base
  8. Are there minimum royalties and if so, how much?
  9. What happens if the minimum royalties are not paid?
  10. Are there any upfront payments and if so, how much?
  11. Are the upfront payments an advance against royalties?
  12. Who enforces the intellectual property rights against an infringer?
  13. What happens if practice of the licensed rights results in infringement? Who is responsible?

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