Companies have different strengths. The company with creative, technically trained executives may turn out marvelous products that they have little idea how to market, while other companies may be marketing whizzes with little product flow. Out of this may be born licensing or strategic partnering transactions.
Licensing
Licensing may involve patents, trademarks, copyrights (including copyrights in software), or trade secrets and know-how. Different legal doctrines and issues will arise in each of these types of transactions. The primary business issues that need to be resolved may include:
-Is the license exclusive or non-exclusive?
-What is the royalty rate? Are there any lump-sum license fees? Are they to be credited against future royalties?
-What is the duration of the license?
-For what field of use is the license being granted?
-What territory is covered?
-Who is responsible for warranty coverage and customer support?
-Who is responsible for enforcing any intellectual property rights that may be involved?
-Are there any performance targets, such as sales volumes, that the licensee must achieve to keep its license rights alive?
Legal issues will also need to be covered in the text of the license agreement. For example, what representations and warranties will the licensor provide? What audit rights will the licensor have? What level of efforts must the licensee exert to promote the licensed property? How should the parties allocate any legal expenses associated with enforcing intellectual property rights (or defending against claims of infringement)? How does the licensor assure itself that the licensee's quality control is adequate? [Read the full article]
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