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