Navigating the Licensing Landscape:

Licensing Options to Consider

Navigating the Licensing Landscape

Rather than pursuing traditional licensing, inventors and institutions might explore alternative routes such as establishing a Startup company to directly commercialize the technology. This approach offers enhanced control over both product development and distribution.

Another viable option is forming a Joint Venture or partnership with established companies to co-develop and market the technology, which allows for the sharing of resources and expertise while also reducing risks. In any scenario, the structure and terms of the Licensing Agreement are critical to the success of the commercial endeavor and the subsequent revenue generated: the licensor's success is closely linked to the licensees’ success.

TT&C’s Assistance with License Agreements

Although TT&C will assist you with structuring the Licensing Agreement’s Financial and Non-Financial terms, you should consider the following points when reviewing or negotiating a Licensing Agreement for your invention.

  1. Option to License vs. Direct Licensing:The Option to License Agreement allows a company to assess the technology over a specified period before deciding to secure a full license. Conversely, a Direct Licensing Agreement immediately confers the rights to use, manufacture, and market the technology, generally in return for upfront fees, royalties, or other forms of compensation.
  2. Collecting Royalty Payments after Patent Expiration: Royalties can sometimes be collected even after the expiration of the patent, especially if the Licensing Agreement stipulates payments for continued use of the technology or associated know-how. These arrangements depend on the value the technology continues to provide to the licensee and the terms agreed upon in the original Licensing Agreement. It's important to draft these agreements with foresight, potentially including clauses that extend royalty payments beyond the life of the patent if the technology remains integral to the licensee’s business.
  3. Minimum Royalty Payments: To mitigate the risk of a Licensee failing to diligently commercialize the licensed invention, instituting minimum Royalty payments is effective. Coupling these payments with Milestones related to production and sales targets can not only ensure a steady income stream, but also serve as a mechanism to enforce compliance. Failure to meet these benchmarks could trigger the termination of an Exclusive License Agreement, safeguarding the licensor's interests.
  4. Grant of Rights, Audit Rights, Equity: Key business topics in Licensing Agreements include the Grant of Rights, which defines the scope and extent of the licenses granted, including geographic regions, field of use, and exclusivity. Audit Rights allow the licensor to ensure compliance with financial terms and proper usage of the technology. Equity arrangements might also be included, particularly in startup-related licenses, where the Licensor obtains equity in the Licensee’s company as part of the compensation. Each of these elements needs to be carefully negotiated to align with the strategic goals of both the Licensor and the Licensee.