Tips for licensing in a global marketplace

On Behalf of | Nov 13, 2017 | Licensing |

What’s your market? That’s a fundamental question an entrepreneur needs answered to succeed. If you can’t identify who will buy your product or service, you can’t easily communicate your value proposition to the right people.

In today’s economy, another factor often comes into play. The potential market for what you offer could be much greater than just your city, state or even nation. Look across the border, and a completely new market might exist. You can tap it, but only if you establish the proper legal position. At the very least, you want to ensure you have proper trademark registration here and there. Additionally, you might spread your reach by partnering with a foreign enterprise through licensing.

Making sure the right pieces are in place

In broad terms, experienced intellectual property attorneys would likely agree that there are at least three elements to successful foreign licensing. These include:

  • Choosing potential partners wisely
  • Smartly negotiating the important agreement terms
  • Closely monitoring execution of the license

Breaking things down more specifically

Imagine the following. You have a product you want to sell in Asian markets. You could try to expand your entire operation into that region or find companies already in place to take things on so that all you need do is collect royalties.

To be sure a partner is up to the task, you should at least get references from other partners. Getting data on the prospective partner’s record in handling similar products should be a priority, too. How are they on meeting deadlines? Do they follow acceptable accounting methods? Are they committed to upholding your brand?

In the context of beneficial contract terms, consider these thoughts.

  • Ensure that possible disputes are resolved under California or U.S. law.
  • Establish U.S. court jurisdiction, especially for companies without a U.S. presence.
  • Consider requiring arbitration to resolve disputes.
  • Ask for an advance against royalties. Consider this something like earnest money.
  • Require payment by wire transfer to avoid delays in cash flow.
  • Insist on regular accounting statements and secure the power to order an audit.
  • Give yourself an escape clause (e.g., minimum annual royalties) and set a clear end date to avoid being locked into a non-productive agreement.

Ultimately, protecting intellectual property in any market means protecting yourself. And an IP attorney can help.