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If you are a business in the UK considering licensing your intellectual property rights, you should be clear on what licensing IP rights mean. Intellectual property grants the owner exclusive rights over usage, notably when registered. For example, registered trade marks are owned exclusively by the business that registered them, which provides the owner with remedies such as legal action if another company infringes their IP rights. Therefore, for another business to use your intellectual property without infringing your exclusive rights, you must agree to this by licensing your IP rights. This article will discuss what you need to know about licensing your IP rights.
What is Licensing?
Licensing is when you come to a formal licensing agreement with another business that permits them to use your intellectual property in agreed ways in exchange for a fee. You can licence:
- trade marks (e.g. logos or slogans);
- patents (e.g. new inventions);
- copyright protection (e.g. original work, creative works); and
- design rights (e.g. new product designs).
Things to Consider When Licensing your IP Rights
You may wish to consider the types of permission you are granting the licence holder. It is essential to decide things such as:
- whether the licence will be an exclusive, non-exclusive licence or sole licence;
- the restrictions associated with using the IP;
- the possibility of the licensor granting sub-licences to other parties;
- any rules relating to manufacturing/selling; and
- the duration of time the licence will last.
The licensing process involves a carefully drafted contractual agreement between you as the intellectual property owner and another party. This agreement permits other parties to use the intellectual property in a certain way. You must draft these agreements carefully to ensure you protect your intellectual property rights as you intend. You may choose to obtain a one-off fee from the business that acquires the licence, or you may wish to come to a regular fee-based system dependent on timeframes, manufacturing, etc. The most important thing to note is that you must take care when drafting your agreement. Therefore, obtaining legal advice from an intellectual property specialist is highly advisable.
LegalVision’s Trade Mark Essentials Guide provides valuable information for any business looking to register or enforce a trade mark.
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Benefits of Licensing Your Intellectual Property
Licensing your intellectual property can benefit you as a business owner as you still retain ownership while also benefiting from another income stream. This can be useful when you feel like another business could, for example, manufacture or sell your product better than you could. You could also license your IP to companies in other countries where you do not currently trade and, therefore, expand your geographical presence.
It is essential, however, to recognise when licensing your IP would not be beneficial. Some examples of this situation include:
- where the company could potentially damage the reputation of your intellectual property;
- situations where you are not earning a high enough revenue to justify licensing;
- when the licensing would result in the value of your IP assets diminishing; and
- when too many businesses are being granted a licence.
You are not obliged to inform the Intellectual Property Office if you decide to grant a third party a licence for your IP rights, but it is advisable to do this within six months. When informing the Intellectual Property Office, you will be required to provide the following:
- date of the licence agreement;
- names and addresses of parties to the agreement; and
- any relevant numbers or references, e.g. patent number.
Key Takeaways
In the UK, you can licence your intellectual property at any point. Licensing is when you enter into a formal contractual agreement with another business that permits them to use your intellectual property in specific ways in exchange for a fee. You can agree on the fee structure and amount applicable and should ensure this is drafted carefully. Licensing can be complex, and there are many things to consider, such as relevant restrictions you wish to place on usage, fee structures and duration of the licence. You should therefore take professional legal advice and instruct a specialist when entering a licensing agreement.
If you need help or advice around licensing your intellectual property, LegalVision’s experienced intellectual property lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
This means you formally agree to another business using your intellectual property in exchange for a fee. You should draw up the exact details of the agreement carefully to ensure all appropriate restrictions are in place.
You can license any type of intellectual property. Therefore, if you own a trade mark, patent, copyright, design rights or any other intellectual property, you can form a licensing agreement for this property.
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