The commercialisation of innovations can be implemented in many different ways and through a variety of contractual arrangements. The first step for commercialisation is to protect the company’s IP assets, either through registration or agreements. Protected innovations, IP rights, can be commercialised, for example, through licensing.
With a licensing agreement, the licenser grants the licensee a specific right to use the licensed item for a compensation in such a way that the licenser retains the ownership rights to the item. Licensing may be the business model of the entire company or a way to expand business operations to new product groups or abroad, for example. A licensing agreement may be used to transfer, for example, the right to manufacture, sell or further develop a product.
Since a licensing agreement is usually a long-term reciprocal partnership, selecting a good and reliable contractual partner is worth investing in. We recommend using the help of commercial, technical as well as legal experts as far as possible while the licensing agreement is prepared in order to achieve a comprehensive result.
TIPS FOR LICENSING AGREEMENTS
- It is important to define in the agreement exactly which rights are transferred and within what geographical area. The license may be granted for, for example, a specific registered right (patent, trademark), copyrighted work or non-registered know-how or expertise that is defined on a case-by-case basis.
- The scope of the licensee’s rights affects many other terms of the licensing agreement. The licensee may obtain an exclusive license (excludes all other licensees and the licenser), a concurrent license (excludes all other licensees but allows the licenser’s own use), or a non-exclusive license (allows other licensees and the licenser’s own use).
- License fees, other compensations and their justifications as well as payment schedules should be defined in an unambiguous and practical way. The licenser may be granted the right to obtain, for example, sales reports from the licensee in order to ensure the correct amount of royalties, as well as the right to review the licensee’s accounts regarding the subject of the licensing agreement.
- If further development of the licensed technology is permitted, who owns the possible new IP rights created by the licensee that have been created using the rights of the licenser?
- Are the rights sublicensable or transferable? Does the licensee have the right to license their own rights to others? Is the actual licensing agreement transferable?
- Agreement period and the termination and cancellation terms of the agreement. How to proceed when the licensing agreement ends or is terminated should also be agreed on; in other words, what happens to unsold products and under what schedule.
- Violation of rights and dispute resolution. If the rights subject to the licensing agreement are violated, how are the violations handled in practice? What if the rights subject to the licensing agreement violate the rights of a third party? Terms and conditions regarding confidentiality, agreement violations and their consequences, dispute resolution and applicable law should also be included in the agreement.
Do you or your company have questions related to commercialisation and licensing? Our team of legal and technical experts as well as our extensive network of international partners are happy to help you move forward with licensing.
Sanna Häikiö
sanna.haikio@kolster.fi
+358 40 532 2511