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Tips to Get the Most Out of a Licensing Agreement

A licensing agreement is a legal tool that allows one party to use another’s intellectual property (IP). A large company like Disney or an NFL team may license their characters or team trademarks to other companies to help sell products like clothing, shoes or toys. Licensing agreements are not just for big businesses however. Small businesses can also benefit from these agreements.

Licensing agreements are contracts that involve one party, the licensee, paying another party, the licensor, for the right to use the intellectual property. These agreements generally include details about payment, exclusivity, and territory as well as whether or not the licensee can make sub-agreements. The contract may include provisions about quality assurance so the licensor can make sure the product meets their standards. If the product does not meet the licensor’s test protocols or standards, the contract may state that the product cannot go to market.

How Can I Cake the Most of a licensing agreement?

Although the exact provisions will vary with each business arrangement, these general tips can help to better ensure a successful agreement.

  • Make sure the agreement is clear on who owns the IP. The IP owner will also want to make sure the technology or service is properly registered before moving forward with a licensing agreement. Common problems with these agreements can arise when there is confusion about certain terms. You can reduce this risk by making sure the definitions are clear. Review the contract for the definitions of terms like net sales and royalties. Make sure the definitions are in line with your expectations.
  • Due diligence. Take the time to look into the other business’ financials before finalizing the agreement. Ask questions if the numbers do not add up or if anything looks concerning.
  • Discuss what will happen if things go wrong. What if the licensee or licensor goes bankrupt or cannot meet the obligations specified within the contract? What are the penalties if there is a breach?

Business leaders and IP owners are wise to tailor the exact scope and terms used within a licensing agreement to each business transaction. This will help better ensure your business interests are protected in each deal.

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I came to Tommy for help reviewing a licensing agreement I had secured with a well-known manufacturer. Tommy made sure I understood all the details in the contract and he negotiated with the company to improve my side of the deal. I mentioned to Tommy at my first consultation that we were looking to expand throughout the US and were investing a lot of money to make a big entrance into the market. I did not think I would have my store open so soon but Tommy also has connections with the local area and realtors to help me secure the location for my first store in the Los Angeles area. Tommy works a lot with the local businesses and he understands how to transition from the Asian market to US market. Within 8 months my store was open for business and fully operating. I must recommend Tommy to any business owners looking for help with contracts and improving their side of the deal. Tommy has the knowledge and experience to make sure there is a smooth process to open for business here, and make sure that your company is set up for success.


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I have been working on my Utility Patent for almost 4 years. I have hired and fired two very reputable IP firms because with all their expertise and reputation for being some of the top firms in IP Law, I felt a lack of connection and care in my product, time and financial investment. Then I found Tommy and his team. Tommy does not waste time. He and his team are professional and extremely thorough. After 4 years, I finally found a legal team that I felt spent the time to really understand the components of my utility patent. Tommy also very mindful of cost and how and where my money would be better spent. I really feel I am in great hands with Tommy and his team. They have been patient with my revisions. And most importantly, they made me feel that they fully understood the importance this patent is to me. It has been a great and comforting pleasure working with Tommy.


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