What Should You Look Out For When Licensing Someone’s IP?

Licensing rights to intellectual property (IP) is a smart strategy for businesses and entrepreneurs looking to launch new products. However, before signing a licensing agreement, you must take one crucial step to avoid getting stuck with an IP albatross.

As a licensee, you invest significant time, money, and resources into licensing and commercializing an IP. Thorough due diligence is essential to ensure your best chance of success.

Due diligence often gets overlooked but is a critical step in evaluating an IP for licensing. It involves gathering information about the ownership, availability of rights, commercialization readiness, and profitability of the IP.

To start, you need to determine if the IP rights are available. Wasting time and resources on negotiations can be avoided if you confirm that the rights are not licensed to someone else.

Next, it is essential to conduct a quick search to verify if the IP is registered correctly. Public databases, such as the USPTO or Google Patents, can provide this information for patents and trademarks.

If the licensor has other licensees, checking for any conflicts with existing rights is crucial. Knowing if other licensees have similar or competing products is essential, especially if the rights granted are non-exclusive.

Evaluating the strength of the IP is also necessary. Is it unique and distinct, or just a trendy fad? For instance, certain types of IP, like movies, may have a short lifespan in the market and should be carefully considered.

Additionally, assessing the reputation and stability of the IP owner in the marketplace is essential. Carefully consider Any past actions by licensees that negatively impacted the image of the IP. This is particularly relevant in the case of sports figures or celebrities prone to controversy.

Lastly, verifying the commercial viability of the IP is crucial. This may require significant effort, especially for technology-focused IPs. An unknown or untested IP will require more time and resources to commercialize than one already in the market. Consumer interest and demand will ultimately determine the potential success of the IP.

By following these steps and conducting thorough due diligence, you can ensure a successful licensing agreement and avoid getting with an albatross IP.

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