Technology licensing occurs only when one of the parties owns valuable intangible assets, known as Intellectual Property (IP). A License Agreement is a consent by the owner to the use of IP in exchange for money or something else of value.
Technology that could be licensed to make money:
Different kinds of technology licenses:
Preparing the License:
This stage involves due diligence followed be negotiation which would address following questions:
Each party must consider the license from the perspective of one receiving rights (license in), or giving rights (license out), or both receiving and giving rights (cross license)? If this is a license in, will the licensee pay money to the licensor? If this is a license out, will licensor receive money from the licensee? Will there be money paid or received in a cross license? Is payment of money the primary benefit/value that will be provided in exchange for the license or are there other benefits/values?
Remember the use of IP in a development program can be infringement, it is risky to begin to work on a technology project before a definitive agreement has been reached. Negotiating and signing a license agreement is an important step.
Preliminary agreements that you will need:
Note: Do not use Standstill agreements or agreements to negotiate on an exclusive basis are almost never desirable and should generally be refused.
The scope of rights:
Once you have had a clear understanding of WHAT you wish to license in or license out, you will need to reflect on what you need to be able to DO with the IP/technology to use it effectively in your business. This is referred to as the scope of the license. A license with broad scope gives you a great deal of flexibility. A license with a narrow scope will be less flexible but probably also less expensive.
The technology licensing often does increase the ability of both partners to compete as well as with other competitors. Ideally, it is important to involve lawyers from the beginning of the negotiations until the end, who will consider the term sheet and will provide you thorough legal review before drafting the contract and during the drafting process.
It is advised you (owner of IP) know information related to the business of the other party e.g. public information on revenues, employees, financial history, technology press releases, website information, etc. Gather samples and forms of agreements that seem relevant to this transaction.
Technology License agreement is an important guide to what should happen in a complex, technology-based business relationship. Technology licenses and corollary agreements are generally more complex and often impose important conditions, the violation of which can create legal liability and business mistrust. Without any further due, consult a lawyer and discuss all the question you have in mind upfront. Happy to help, let’s talk!