To Licence or not to Licence

To Licence or not to Licence…

Licensing your intellectual property can be a great way to partner up with another party to maximise your financial benefit and yet still retain control of your intellectual assets, whether they be copyright, design or trade marks.  However the wrong partner or a poorly negotiated agreement can stop you from realising your brand’s full potential.

Licence agreements can be short or long term and can be for all goods and services or for a subset of your offering.  For example, the Age recently reported that Woolworths has obtained the exclusive rights to the “Hills” brand (think Hills Hoist clothes lines) which currently consists of over 240 products including clothes lines, clothes care and garden sprayers (click here for the full article).  This will enable Hills to focus on other product development and areas of business – presumably ones that have been excluded from the licence.

The benefits of licensing can include having your licensee take all the risk in manufacturing and distributing your product whilst you retain a portion of licence fees.  If you partner up wisely, you could end up having your licensee develop a strong brand recognition that you can leverage off at the end of the agreement.  The down side is that if you partner up with the wrong person you could end up hamstrung in an arrangement where you are unable to reap the rewards of the intellectual property that you have developed.

There are many factors to consider when looking at whether to licence your intellectual property, for example:

  • Will you will continue to develop products and sell or licence them to third parties either within Australia or overseas or will your licensee have full exclusivity?
  • What happens if you decide to branch out into a new merchandise area – for example you licence all your intellectual property (which at the time of the agreement only related to shoes) but you now decide to manufacture dresses?
  • If you intend to continue manufacturing or distributing your product in addition to your licensee you will need to factor this into the exclusivity arrangement.
  • What promises or expectations are there that your licensee will promote and build your brand or product recognition? This can be managed by a thorough contract that allows for performance hurdles and targets.
  • Who is manufacturing the product, and what happens if your licensee sells defective merchandise or damages your brand?
  • How much control will you have over the look and feel of end products?

At Gladwin Legal we work with you, not only in the contract negotiations, but to to prepare for the pre-contractual discussions so that you can plan your licensing strategy at the outset to maximise your benefit.