Licensing

Question 1

What is required under a license (contract)?

Answer 1

• Consideration
• Clarity of terms
• What happens if it is breached? What are the consequences of that breach?
• Is it legal (consider competition law)?

Question 2

What important considerations are there for deciding who is party to the agreement?

Answer 2

• Who is the person or company who owns the IP?
• Who is the other side? Is it a parent company or a subsidiary company?
• Who is going to be responsible for use? Should it cover multiple subsidiaries.

Question 3

What important considerations are there for what is being licensed?

Answer 3

• What trade mark is being licensed?
• What is the registration number?
• Which part of the registration is it and is it all goods and services?
• Will the registration need to be expanded or a new filing required?
• Add it to a schedule

Question 4

What important considerations are there about where the license applies and how long for?

Answer 4

• Where - where is the use permitted. Is it just the UK? Is it a UK registration or an EU one?
• When - how long is the license for. No need for it to be perpetual

Question 5

What is an exclusive license?

Answer 5

The licensor divests themselves of the right to use the mark and only the licensee may use the mark.

Question 6

What is a non-exclusive license?

Answer 6

The licensor retains the right to use the mark and can license it to someone else

Question 7

What is a sole license?

Answer 7

Both the licensor and licensee can use the mark, but the licensor cannot license it to anyone else.
*Within the scope of the license - if part of the mark is not licensed or certain goods/services are not licensed under a sole license, the licensor retains the right to license those parts to third parties

Question 8

What issues are there with an exclusive license?

Answer 8

• Who gets to sue (section 31)

Question 9

What is the issue with a licensee selling their company? How can we get around this?

Answer 9

Privity of contract means they cannot be bound by the license.

Include numerous parties e.g., parents or affiliates if appropriate.

Question 10

What important considerations are there for getting paid for a license?

Answer 10

1) Royalty provisions - how much does the client want to get paid?

2) How often should the client get paid? Longer = more risk

3) Is there a minimum royalty provision?

4) How is the royalty calculated? Does it take into account the licensees costs? Better for licensor to be calculated pre-costs.

5) Do we need accountants to work out the royalty fee?

6) What are the consequences of a failure to pay?

7) Best or reasonable endeavour clauses?

Question 11

What is the difference between a best and reasonable endeavour clause?

Answer 11

Reasonable endeavours means if it makes you go bankrupt in trying, it does not need to be done.

Best endeavours means doing everything in your power in order to meet the license. It is construed quite unfavourably towards licensees.

Question 12

How do we deal with goodwill in a license?

Answer 12

Include a term which explains who the accrued goodwill is owed by i.e., the licensor will want it to be owned by them.

Question 13

Who should deal with policing third party infringement?

Answer 13

• Who polices third party infringement?
• Brand guidelines for how the mark is used.
• Quality control, especially for food and fashion industries.

Question 14

What might the consequences of a breach of a license be?

Answer 14

• Termination - license is terminated. If so, make sure that royalties that are due are paid and that any existing stock is dealt with.
• Dispute resolution - can the dispute be resolved so that the license continues, but amendments are made e.g., greater royalty fees or less onerous obligations on the licensor?

Question 15

What important boiler plate considerations are there?

Answer 15

• Jurisdiction
• Choice of law
• Severability

Question 16

How should renewals be dealt with in a license?

Answer 16

• Renewals, fees and deadlines (licensor should want to keep control)

Question 17

Why does it matter how the licensor permits the licensee to use the mark?

Answer 17

• You do not want them to be using it in a way which brings it into disrepute
• You want it to be use which is capable of maintaining the registration
• Equally you do not want it to be used in an infringing manner.

Question 18

How does quality control tie into licensing?

Answer 18

• Licensor would want terms which allows them to have some safeguards in place to keep quality control high and prevent unsafe or bad quality goods.

Question 19

What options are there for the licensor being paid or benefiting notwithstanding the termination or breach of the license?

Answer 19

• Terms to ensure they continue to get paid notwithstanding a breach, and can include interest for any late payments.