How can I avoid intellectual property licensing litigation?

Litigation, regardless of the reason behind it, is always expensive. This is why most businesses seek to avoid it through prudent business planning, contractual negotiations with litigation avoidance in mind, dispute resolution provisions in their contracts, etc. Intellectual property licensing is no different, and with proper planning, intellectual property licensing litigation can be mitigated, if not avoided altogether.

Step 1: Understand your business goals

Before entering into any intellectual property licensing, you need to understand your business goals and objectives as it relates to that licensing. What are you trying to achieve? Are you just looking for passive income, brand expansion, technology proliferation or something else? Know why you are doing this before you begin doing it. Otherwise, you may find that intellectual property licensing is not right for you when your business has already signed the San Diego, California, contract.

Step 2: Make sure you are licensing what you want to license

Intellectual property licensing can be minimized or maximized as your business needs dictate. However, this information must be in the intellectual property licensing agreement between you and the licensee that can include your businesses’ patents, trademarks and copyrights. There are six broad contractual considerations. The first is price. How much do you want to be paid, and how do you want to be paid? Intellectual property licensing costs can be structured however you want, including lump-sum payments, a recurring fee, royalty, etc.

The second item is time. How long do you want your license to last? Rarely should an intellectual property license be indefinite, but it could be annually, bi-annually or however long makes business sense.

Third, think about territory. To avoid competition, many licensors restrict licensees to territories, like regional, national or international. And, this means consideration must be given to which rights can be sold or assigned by the licensee as well. Do you want licensees to have the ability to sell or assign their rights to unknown parties or even allow licensees to consolidate operations with other licensees? Think about the power a combined business could exert on your business, or the ability of unknown parties to hurt your brand. This also brings up the issue of exclusivity and rights, like the right to make adaptions or modifications, reproduction, distribution, etc.

Step 3: Plan for disputes now

All intellectual property licenses should include provisions that relate to infringement, indemnification from third-party claims, which laws will apply to disputes and a formalized dispute resolution process. As the San Diego, California, licensor and intellectual property licensing agreement drafter, you can plan out the most advantageous dispute resolution process. Use that power now before there is an issue.