Product Licensing Agreements – The Basics | Nara

Product licensing agreements, whether or not the product is software program, {hardware}, or easy client items, focus on two main authorized areas: contract legislation and trademark legislation. The contract a part of the settlement is pretty apparent whereas trademark is an added necessity on this trendy age (the place typically as much as 90% of a product’s worth consists of the identify or brand on its packaging).

The distributor license – a typical product licensing settlement – is a sophisticated settlement whose drafters should take further care to delineate every celebration’s rights and tasks else expensive litigation is the surefire end-result.

Here is what a typical distributor settlement ought to have:

1) The events (clearly).

2) The Companies: This can be a detailed description of every celebration’s duty to the opposite. For instance: Celebration A agrees to distribute software program in New York for celebration A. In return, Celebration B agrees to not license some other events to distribute the software program in New York. Maybe celebration B may also be liable for updating and offering buyer warranties for the software program? That is in the end as much as the events…

3) The Cost: Who pays whom? At what intervals? What are the penalties for late funds? Who’s liable for coping with the end-client, accumulating on invoices, and so forth…?

4) Extra Warranties: That is the place the events make extra guarantees to 1 one other. That is additionally the place a great lawyer will anticipate and supply for as many contingencies as potential: ought to an unanticipated contingency happen, expensive litigation turns into inevitable (e.g., the distributor’s state passes a brand new tax on the kind of product distributor sells and the settlement fails to supply which celebration bears the burden of this new tax). Finest Recommendation: Don’t depend on Googled kinds, particularly for big worth agreements; rent a lawyer who is aware of your business and, due to this fact, is aware of what can go fallacious.

5) Proprietary Rights: That is the trademark legislation part. The settlement ought to clearly state which mental property belongs to which celebration. After a number of years of working collectively and utilizing each other’s logos in your merchandise, the strains between who owns what can get blurred…

6) Limitation on Legal responsibility: That is often commonplace language the place every celebration agrees to not maintain the opposite liable for normal failures below the settlement (you’ll be able to’t disclaim non-standard failures, like setting hearth to the warehouse).

7) Time period (time): That is self-evident.

8) Termination: That is additionally essential and requires sound authorized counsel. How a relationship terminates and what persevering with rights and tasks the events have are simply as vital and litigation-prone as how the settlement begins.

9) Arbitration and Alternative of Legislation: These are optionally available however extremely really helpful. A robust arbitration clause will be sure that any disagreements go to arbitration. Whereas arbitration can get expensive, such prices don’t come close to the years-long engagement of movement observe, discovery and appeals you see in conventional litigation.

In sum, the primary aim of a well-drafted settlement is to supply for as many contingencies as potential with a purpose to keep away from future disputes and positively to keep away from expensive litigation over such disputes.



Source by Tim Bukher

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