Expansion Systems

LIcensing Defined

From Wikipedia, the free encyclopedia

The verb license or grant license means to give permission. The noun licence (or license in American spelling) is the document demonstrating that permission. License may be granted by a party ("licensor") to another party ("licensee") as an element of an agreement between those parties. A shorthand definition of a license is "a promise (by the licensor) not to sue (the licensee)."

A license is a grant of permission to allow another to make use of intellectual property rights. The intellectual property right may be for a patent, trademark, trade secret, or copyright. The license may even be for technical or business "know-how". A license differs from an assignment of intellectual property rights. An assignment conveys title of the intellectual property. In a license, title of the intellectual property usually stays with the owner (called the "licensor"), rather than being conveyed to the license holder (called the "licensee"). Licenses may be exclusive or nonexclusive.

A nonexclusive license means that the intellectual property rights conveyed may be granted to more than one licensee.

An exclusive license does not necessarily mean that there is only one licensee. It may mean that the scope of the license is exclusive to a certain geographical area, to a specific product area or to a limited field of use. For example, a licensor may grant an exclusive license for a product for sale in the United State, or parts thereof, and may grant another exclusive license for the product sales outside the United States.

A patent license is a grant of permission to make, use or sell a patented product, design or process. A nonexclusive licensee normally does not have the right to sue an infringer, while an exclusive patent licensee can sue for infringement. By being granted the license, the licensee can sell or use the patented invention without being sued for infringing the patent.

A trademark or service mark license is a grant of permission by the owner of a trademark to allow another to use the mark. A trademark license differs from other types of licenses because the trademark owner must exercise some degree of control over the nature and quality of the goods or services on which the licensed trademark is used. This is because a trademark is used to indicate the quality of the goods and the source of the goods. Therefore, the licensor of the trademark must exert control to be sure that the public is not deceived into buying goods or services, thinking they have a certain quality or are from a certain source when they do not. If adequate quality control is not present, the trademark license may be deemed a "naked license" and invalid. Even worse, the mark may cease to indicate the quality or source of the goods or services, and therefore may be considered abandoned or lost. Quality control usually means that the licensor has supervised the goods or services sufficiently to guarantee their quality.

A trade secret license is a grant of permission to make, use or sell a product, design or process made using a trade secret. In order to keep a trade secret confidential, there must be plans and controls in place to keep the information secret. So a key part of the trade secret license is specifying and monitoring the controls and protection put in place by the licensee so that the trade secret is kept confidential.

In a know-how license, the licensor has usually developed or has access to key technology that is sought by the licensee. Sometimes the know-how is a trade secret, but often it is not. In a license for know-how, the licensee is willing to license and pay for the transfer of the licensor's technology knowledge

Many of our clients come to us with an interest in franchising their ideas, products or service with the goal of obtaining ongoing revenue.

Before we accept any client, we begin by discussing their goals and objectives. If they have an idea, invention, product or service, we look at the best ways to approach the marketplace.

Very often, we discover the potential client is a better candidate for licensing than for franchising. Both methods provide up-front revenue and both offer ongoing income for a specified period of time. Too, just as with franchises, licenses can be restricted in other ways, such as by territory, thereby maximizing the profit potential to that client through the sale of multiple licenses.

If you feel you have an idea, invention, product or service that could be licensed, why not talk to an Expansions Systems Licensing professional? We offer a FREE 30 minute evaluation. Simply send us an overview along with contact information and we will quickly respond to your request. Email us at: licensing@expansionsytems.com

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