This article examines the issues of “licensing” your ideas and “Intellectual Property” to allow you to take economic advantage of the work you have done, but retain ownership and control.

What is licensing?

For this discussion, we will assume that you have created something that is useful and perhaps valuable using your intelligence and experience.  This thing you have created is not something tangible, like cans of soup.  Instead, it is intangible because it cannot be held in your hand or sent by truck.  It exists as a set of unique ideas.  This may include an educational curriculum, computer programming, software, an app for mobile devices, artwork, designs, or if you are Bill Gates; the Microsoft Operating System.  This is called Intellectual Property (“IP”).

Like the fabled George C. Parker who sold the Brooklyn Bridge over and over to immigrants and visitors to New York City, IP can also be transferred over and over.  However, unlike the Brooklyn Bridge scenario, IP can be lawfully licensed (not sold) over and over, while all the time, the IP owner keeps the ownership and protects the underlying ideas from being stolen, exploited, or deconstructed by someone else.

What is Intellectual Property?

IP includes copyrights, trademarks, trade names, trade secrets, patents and a few other types. Intellectual Property is what the term implies. It is property which you own.  Others do not have rights to it.  Stealing is not allowed, nor is borrowing it without your permission.  That is what the law says and has said for hundreds of years.  It is intellectual, because it is idea-based.  The unique thing about IP is that, as with most any idea, you can give it to someone else and you can still have it.   This is not the case with hard goods like cans of soup which once sold, are gone and you must make more before another sale can be made.

Protection of IP

The long legal history of IP is beyond the scope of this article.  Importantly, the law has recognized that unless IP is protected so that the owner can profit by what they have created, there will be little or no incentive for people to create more IP.

As well, the law see IP as being property just like real estate, with all the rights of property that you can see, touch, or live inside, or farm on.

Some people thinks that IP has a lesser value or fewer rights attached than hard goods. Some have no reluctance in stealing IP, like unauthorized music downloads, because the underlying property still exists and there seems to be no tangible harm to the owner, whoever that is.

The law does not see it that way.  The law says that this is as much stealing as a robbery done at gunpoint in a dark alley.  Because the law sees it that way, it will protect the owner and it should.

However, unlike a robbery at gunpoint, the victim of IP theft cannot call the police and let them handle finding the robbers.  Owners of IP must call their lawyer and start a civil lawsuit to get the property back, stop its use, and seek money damages in court.

How to License

Like IP itself, licensing is idea based and used a legal framework and one or more contracts.  For this discussion, let’s assume you are Bill Gates and you have created the Microsoft Operating System.  You can find a ready buyer and sell it for whatever amount you can get.  Once you sell it, it is gone. You no longer own it and future profits go to someone else.  As well, it is likely that the underlying ideas also go with the sale so that you cannot create another system just like it and sell that too.

Licensing allows you, in exchange for a fee, to retain ownership of the IP, its underpinnings and the rights to modify and develop it further.  Licensing is the contractual act of allowing another to use the IP only in ways you specify. It limits and prohibits other types of use and can limit the timeframe for use.

Licensing agreements are some of the longest documents I draft.  This is because the laws are complex and you must assure that all possible scenarios for use and the limitations are clearly laid out in the licensing documents.  All the holes in a potentially leaky bucket must be filled.

What to License

You must clearly state exactly what is being licensed. The person paying for the license (“Licensee”) wants to know exactly what they are getting and not getting for their money.  You must also delineate what the Licensee will pay, how long the license lasts, and what happens if the license terms are violated; either by the Licensee, or by others to whom the Licensee is allowed to provide the IP under the License.  In the Microsoft example, Acme Company may purchase a license for 10,000 Microsoft users because they have 10,000 employees who need to use the product on their computers.  Each user must be bound in the Licensing agreement to the terms of the License.  They are also not allowed to sell or use the product outside the license terms.  If they do, Acme Company is liable to Microsoft.  These additional controls and “User Sub-Licenses” are an essential part of most types of IP licensing.   You may have seen End-User Licenses or “EULAs” in the terms and conditions of apps or software you have used.

Conclusion

IP licensing is an excellent way to leverage the work you have done and the IP you have created, while retaining ultimate ownership, and creating a profit stream for you.

IP attorneys are among the most highly paid because of the risks involved and the complexity of the law. I will try to work within your budget to draft and negotiate licensing agreements to suit your needs and protect your property interests.

Please contact me and we can discuss the potential of licensing for you, along with other IP issues like trademark and copyright.

Glen R. McCluskey

Attorney At Law

651-646-2669

glenlaw@glen-law-office.com

THIS DOCUMENT IS NOT LEGAL ADVICE AND MAY NOT BE DEEMED TO BE LEGAL ADVICE.  IT DEALS ONLY WITH THE MATERIAL SPECIFICALLY DISCUSSED HERE.  YOUR SITUATION WILL BE BASED ON YOUR OWN FACTS AND CIRCUMSTANCES.  YOU ARE ENCOURAGED TO SEEK THE ASSISTANCE OF YOUR OWN LEGAL COUNSEL AND TAX ADVISOR.