Law Office of David MacTavish, LLC

Chicago skyline Chicago metro area

Licensing and Contracting

Copyrights, trademarks, trade secrets, patents, and ideas generally don't have monetary value until the people who create or own these works license or sell these works to other parties.

Publishers of all kinds seek images and writings. Recording companies need a constant supply of music, lyrics, and musicianship. Businesses are always looking for software writers to bring new and exciting Internet and computer presentations. Manufacturers and service providers are always looking to purchase or license the rights to manufacture, distribute, or franchise new and successful products and services. Businesses also look to purchase or license trade secrets from competitors. And galleries, museums, art patrons, estates, and artists actively engage in selling, trading, and licensing art work.

The above transactions either involve an outright sale or a license. In a sale all or some of an owner's rights pass to the purchaser. Under a license the owner retains ownership of the rights but for a period of time permits the licensee to use the rights. For example, a firm produces and distributes a product under the XYZ trademark. The firm decides to move in other directions, but XYZ remains a good seller. The firm finds another company and sells the rights to produce XYZ, including the XYZ trademark. This generally results in a one–time sales price that is paid outright or over time. Instead of selling, the firm could license XYZ and receive royalty payments from the licensee during the time that the licensee manufactures XYZ. This means the firm won't receive as large a payment, but will receive smaller payments over a longer period of time. During the period of the license the firm will have to monitor the quality of the XYZ as manufactured by the licensee to ensure that quality doesn't decay and the firm loses their trademark. 

One of the advantages of intellectual property is that it often can be licensed many times to many users without conflict. It all depends upon the terms of the license and the viewpoint of the licensee(s). For example, in the case above, if the firm licenses manufacturing of its XYZ product to another company and the company can't meet demand, the firm could license another company to also manufacture XYZ. This will depend, of course, upon the terms of the license with the first company and whether the first company was made an exclusive supplier or similar.

Licensing and selling, of course, require negotiating so that the contracting parties understand what it is they are getting and what they are paying for. Also, if licensing, the parties need to understand that ownership is not included.

Companies too often use documents obtained from the Internet or attempt to modify contracts used for other purposes. This can have fatal consequences, however, if a dispute arises because too often vital contract terms have been omitted or terms conflict with the laws of the state and don't protect the parties involved.

If you want to license or sell intellectual property, contact the Law Office of David MacTavish, LLC to consult with them, have them negotiate on your behalf, or have them draft documents for you.