26.6.2017

Licensing intellectual property

Giving the right of use or in other words licensing, you can make your intellectual properties earn money without extra investments and still keep the ownership.

You can save money in development costs and get a ready brand through licensing.

Good example of potential win-win licensing is an agreement between HMD Global and Nokia about Nokia brand and right of use of Nokia’s phone patent. Nokia got out of its IPR-portfolio phone patents, which do not fit in its present (2017) business focus, to commercial use without any investments and HMD Global gets with Nokia-brand straight to bigger competition in phone market.

Agreeing about licensing

Rights of use can be given to protected intellectual properties for agreed compensation. The compensation can be regulated in licensing agreement for example as one time compensation or royalties depending on use. In licensing contracts can also be agreed about other terms of use than only compensation. Important agreement terms are for example how to use the licensed product, its geographical extent and duration of agreement with its termination and dissolving terms.

From the owner’s point of view, it is better to define contracts in the beginning of co-operation little bit stricter and tighter, because it is much easier to add more rights in the contract than take them out of it.

In a good licensing contract the terms are determined so accurately that there will be no chance for ambiguity.

Licensing the technology

When planning licensing technology or other innovation, it is important for both the licensor and the licensee to know well the markets and the technology in the field.

Technology licensing is commonly long-lasting and need lots of resources, so choosing the technology and business partner as well the content of licensing contract are often more crucial than in other licensing contracts.

When negotiating about technology licensing, non-disclosure agreement is often an inevitable starting point. Especially if licensed innovation is protected only as a trade secret, concealing the innovation is essential in order to keep its novelty. To protect the rights of an innovation most effectively, it is recommendable to apply for a patent or utility model before licensing.

Licensing a trademark

In licensing trademarks the licensor might need to determine the quality criteria of his products and the use of trademark very carefully. License can be exclusive or limited. License can include the whole registration or it could be limited to certain parts of goods or services. License can also be defined to cover a geographically limited area.

It is recommendable to register licensing contract in trademark register, where everybody can see it.

License which is not in the register, does not take effect towards a third party, who has got the right to a trademark bona fide. The application for registering the license to Finnish Patent and Registration Office (PRH) can be filed by the owner of the trademark or the licensee.

Licensing copyrights

In licensing copyrights there might be several holders of rights involved.

For example music and video recordings might include copyrights of producers, arrangers, publishers, performers, composers and lyricists. In this field there are often long contract chains about copyrights, controlling of which requires accuracy. Only one fault in licensing chain might in the worst case prevent utilization of the whole work.

The most important rules of thumb in licensing copyrights are: copyrights are property of the person who makes the work of art (e.g. author, photographer, composer, graphic artist, computer programmer), the creator transfers the rights of use with contracts (e.g. licensing or employment contract) or he transfers administration of his rights to a collective trustee organization (e.g. Teosto, Gramex, Kopiosto). If there is granted entitlement to transfer rights to a third party in the licensing contract, it is not, of course, possible to transfer wider rights of use than determined in the contract.

In conclusion

If you need help with licensing, our attorneys have wide and diverse experience in preparing contracts concerning utilization of intellectual property rights (IPR) from the point of view of both licensor and licensee.

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