As we have noted in prior posts, innovation drives the marketplace. This means that cultivating new ideas is just as important as nurturing current products. While many would be entrepreneurs have fantastic ideas, getting them to the marketplace in a manner that will make a product successful is a completely different exercise. Because of this, some inventors and entrepreneurs may need help in the development process.
This is where licensing comes in. A license is an agreement between two parties (commonly an inventor and a development company) to use the idea for the purpose of creating a new product or service. Ownership of the idea does not change hands. It remains the sole property of the inventor. However, the collaboration between the two parties gives the development company some right to compensation after the eventual product or service is released to the public.
So what should a potential licensor (i.e. an inventor or entrepreneur) expect from a company seeking to obtain a license to an idea? Essentially, the licensor should expect the licensee to have an established expertise in brand enhancement, be able to understand the finer points of emotional brand connection among consumers, and a commitment to creating an award winning product.
Indeed, these qualities may not be reduced to contractual obligations, but they set the foundation for a fruitful business relationship. If you have questions about contractual obligations between licensor and licensee, an experienced business law attorney can advise you.
The preceding is for informational purposes only and does not constitute legal advice.