Licensing your Intellectual Property can be a Great Way to Increase your Revenues but Must be Done Carefully to Avoid Legal Pitfalls

By: Robert G. Klein, Esq.

One of the most valuable ways of exploiting your intellectual property is through licensing. A license is an agreement between two parties whereby one party grants the other party the right to use its intellectual property, subject to various limitations, in return for royalty payments.

Before one can establish a viable licensing program it is extremely important to assure that your intellectual property rights are established and protected . When licensing a trademark this requires that you have obtained federal registration. While one can obtain trademark rights without registration (i.e. common law rights), federal registration grants greater rights and protections. It would be prudent for any licensee of a trademark to require assurance of a valid federal trademark registration. Another advantage of a federally registered trademark is that it can be provided to the U.S. Customs which can prevent and seize knock-offs and counterfeit goods from entering into the United States.

You can also protect your copyright by registration. By registering your copyright you are granted greater remedies, including statutory damages, if you are ever forced to sue another for copyright infringement. The difference between statutory damages and actual damages you would have to prove without a valid copyright registration can be staggering.

Companies seek to license their intellectual property to increase their profit and revenue stream and to expand the company’s operations into alternative manufacturing and marketing opportunities. Licensing of trademarks is prominent in the designer fashion industry. Certain well known designers with a well established reputation and trademark often expand into non-apparel goods such as accessories, cosmetics, and home items through licensing agreements.

Any one who licenses their trademark to another must retain control over how their trademark is used and must make sure that the licensee contains adequate quality control standards. Failure to assure a standard of quality will effect the licensors goodwill and lessen the value of the trademark.

Once a license agreement terminates, whether by its terms or by a breach of contract, there are a myriad of issues that need to be resolved including liquidation of inventory, return of labels, rights to trade secrets including formulas, molds, and packaging, and an accounting of sales, profits, and royalties.

Los Angeles intellectual property infringement lawyer Robert G. Klein is located in Los Angeles, California. He practices in business litigation with an emphasis on trade secret litigation, unfair competition and trademark infringement. He has acted as lead counsel in about 60 trials. As a Los Angeles intellectual property infringement attorney, Robert G. Klein has obtained multi-million dollar jury verdicts. Mr. Klein has appeared before the United States Supreme Court in order to engage in oral arguments and many of his court decisions have been published as case authority. Robert G. Klein has also published the article: “Consumer List: Trade Secrets or Fair Game?” The article was published in the Los Angeles Lawyer Magazine. You can contact Los Angeles intellectual property infringement attorney Robert G. Klein at (213) 996-8508.