In today's knowledge-based economy, intellectual property (IP) often emerges as a company's most valuable asset. It's not just a defensive tool for maintaining a competitive edge in the marketplace, but also a potent source of revenue. The American Intellectual Property Law Association states that intellectual property licensing provides opportunities to grow, launch new products, and expand into foreign markets. To learn more about licensing and litigation, book a consultation with a qualified intellectual property lawyer in Chicago. Call (929) 724-7529 today to get started with Sullivan & Carter, LLP.

What is IP Licensing & How Does it Work?

IP licensing is a process that involves agreements between IP owners and other entities. These agreements enable the latter to utilize the former's intangible assets for a specified cost. This cost is often recurring and typically deemed a royalty. It's important to note that all major forms of IP can be licensed. This includes patents, trademarks, copyrights, design rights, and even trade secrets. Interestingly, registered forms of IP such as patents and trademarks generally offer a more streamlined and profitable licensing path compared to non-registered forms like trade secrets. This advantage primarily stems from the well-defined and explicit protections registered IPs have that their non-registered equivalents lack. These types of licensing allows the IP to be put to work in more ways and places than the licensor alone could accomplish.

Forms of IP Licensing

Broadly speaking, there are three categories of licenses: Exclusive licenses (where the licensee is the sole entity with the rights to the IP asset), non-exclusive licenses (involving multiple licensees for the same IP), and sole license (a hybrid of the first two, where the original IP owner and one licensee can use the property).

The type of license used depends on numerous factors including the IP type, negotiation power of the involved parties, and desired market exposure. This flexibility of options enables IP owners to craft agreements that meet their specific objectives. Whether to maintain total control of the IP while earning revenue, or grant full rights to one entity for maximum returns, these licenses offer a variety of ways to monetize intellectual property.

Licenses can be further refined based on geography, duration, and field of use. This level of detail enables a more strategic utilization of one's IP in alignment with their business goals. Limited duration or geographical licenses free up the IP for exploitation in other markets when the term ends or in areas not covered by the license. Field-specific licenses allow the same IP to be used in diverse industries, multiplying the revenue streams.

In some cases, the licensor may opt for cross-licensing, providing access to their IP in exchange for access to the licensee's intellectual property. It can be an advantageous move, especially in fields like technology where shared IP resources can spur innovation and competitiveness.

The options available in IP licensing allow the IP owners to maintain the control that they want while maximizing the financial benefits they derive from their property.

Common Disputes That Arise From IP Licenses

Disputes related to intellectual property (IP) licenses can arise for various reasons, often stemming from disagreements over the terms of the license agreement or alleged breaches of those terms. Here are some common disputes that arise from IP licenses:

• Scope of License: Disputes may arise over the scope of the license granted by the licensor to the licensee. This could involve disagreements about the specific rights granted, the territory covered, the duration of the license, or the permitted uses of the intellectual property.
• Royalties and Payment Obligations: Disputes often arise regarding royalty payments and other financial obligations under the license agreement. This could include disagreements over the calculation of royalties, the timing of payments, or the interpretation of clauses related to payment obligations.
• Licensee's Compliance with Terms: The licensor may allege that the licensee has failed to comply with certain terms and conditions of the license agreement. This could include failure to meet quality standards, failure to use the intellectual property in accordance with the agreed-upon specifications, or failure to maintain confidentiality or other obligations.
• Intellectual Property Ownership and Rights: Disputes may arise over ownership or rights to the licensed intellectual property. This could involve challenges to the validity or enforceability of the intellectual property rights, claims of infringement by third parties, or disputes over ownership of improvements or derivative works.
• Termination and Renewal: Disputes may arise when one party seeks to terminate or renew the license agreement. This could occur due to alleged breaches of the agreement, failure to meet performance milestones, changes in business circumstances, or disagreements over the interpretation of termination or renewal provisions.
• Assignment and Sub-Licensing: Disputes may arise over the assignment or sub-licensing of the licensed intellectual property. This could involve disagreements over whether such actions are permitted under the license agreement, the scope of rights granted to assignees or sub-licensees, or the obligations of the parties in connection with assignment or sub-licensing.
• Enforcement of IP Rights: Disputes may arise regarding the enforcement of intellectual property rights against third-party infringers. This could involve disagreements over the licensor's obligations to enforce the intellectual property rights, the allocation of costs associated with enforcement actions, or the consequences of failing to take enforcement action.
• Breach of Confidentiality: Disputes may arise if one party breaches confidentiality obligations under the license agreement. This could involve unauthorized disclosure of confidential information or misuse of proprietary information, leading to claims for damages or injunctive relief.
• Dispute Resolution Mechanisms: Disputes may arise over the interpretation or application of dispute resolution mechanisms contained in the license agreement. This could involve disagreements over the choice of law, jurisdiction, arbitration clauses, or procedures for resolving disputes between the parties.

Resolving disputes arising from IP licenses often requires careful analysis of the terms of the license agreement, as well as an understanding of the applicable intellectual property laws and industry practices. In many cases, parties may seek to resolve disputes through negotiation, mediation, or arbitration, but litigation may be necessary if a resolution cannot be reached amicably.

Contact an Illinois Intellectual Property Lawyer Today

To learn more about the legal implications of licensing intellectual property, book a consultation with a qualified intellectual property lawyer in Illinois. A consultation represents an opportunity to ask questions, receive targeted guidance, and consider the unique circumstances of each company. Call (929) 724-7529 today to book a consultation with Sullivan & Carter, LLP.