Licensing Agreement
Proteja Sua Empresa Agora Mesmo
Taking care of your intellectual property is essential to keep it protected. For example, by registering a trademark, a company can take legal action against future problems of unauthorized use and even counterfeiting and plagiarism. But what about the possibility of licensing intellectual property? Are you familiar with this?
This process, with very specific steps, brings numerous benefits, both for the licensor and the licensee. However, everything must be done in accordance with the law, in order to ensure the protection of the creation. Continue reading the text to learn more about the intellectual property licensing agreement! Enjoy your reading!
What is it?
When you register a creation, you already have the right to exclusive use of your object, right? However, you can also decide to authorize third parties to use it, according to your strategic interests. This is exactly where licensing comes in.
But what does licensing mean? It means granting a license, that is, giving someone permission to use it. Therefore, a licensing contract is an agreement through which the owner/holder of a certain right — licensor — grants permission to a third party — licensee — to explore/use the right under certain conditions that are previously established. Remember that the holder remains the owner of the right.
To make it clear, let’s imagine a character from a well-known and famous cartoon, but one that has already been registered by someone or a company. Now, consider a toy factory that wants to produce a line of games with this character.
What is the act that makes it possible to do this without, however, infringing on the rights of third parties? That’s right, licensing. So, what will happen is that the company that manufactures the products will pass on part of the value, in the form of royalties, to the owner of the rights. In this way, both parties end up having advantages.
It is important to note that the licensing agreement is temporary, meaning that the exploitation of inventions, trademarks, copyrights, industrial designs, etc., can only take place during the period agreed upon by the parties. Furthermore, there is no legal requirement for exclusivity, which means that the holder has the option of licensing to several people at the same time.
The licensing agreement is an option with several positive points that helps the owner to achieve better results with their intellectual property. Remember that, once completed, the agreement will have to be signed by all parties and two witnesses. And, of course, each contracting party will keep a copy of the document to have their guarantee.
Regarding the endorsement or registration of these contracts with the INPI (National Institute of Industrial Property), it is necessary for the licensing to produce effects on third parties (people who are not part of the contract). Not to mention that endorsement or registration is capable of legitimizing payments, both national and international, in addition to allowing tax expediting and, also, proving the use or exploitation of industrial property.
Finally, it is worth noting that free contracts do not require endorsement or registration. Furthermore, the law waives this formality so that the sales documents issued by the licensee are accepted as proof of use of the brand, should someone demand its cancellation.
What is the difference between a license and a transfer?
Well, intellectual property records (trademarks, patents, software, industrial designs, copyrights, etc.) are assets of a person or company, although they are intangible in nature. Therefore, they can be rented, sold or loaned.
It is in Federal Law No. 9,279/1996, specifically in art. 5, that industrial property rights are defined as movable assets, making it clear that the holder can assign (definitively) the rights or license (for a period of time) the use of these rights to third parties, always in a formalization through a contract called an assignment or licensing contract.
Let’s start with the assignment agreement so that the difference between it and a licensing agreement is clear. An assignment agreement refers to the instrument by which intellectual property is permanently transferred from one party to another. Therefore, this agreement is equivalent to a purchase and sale (when it is onerous and involves a financial return) or a donation (when it is free and there is no financial return for the assignment of rights).
In turn, the purpose of the licensing agreement is to temporarily authorize the use or exploitation of intellectual property, without transferring ownership to a third party.
In this case, there is no transfer of ownership rights by the owner of the invention, but there is a transfer, either exclusive or non-exclusive, of possession of the invention to third parties. It is worth remembering that, when the licensing agreement is onerous, royalties will be paid.
Finally, it is important to make clear the seriousness of formalizing these contracts in writing, after all, such instruments will present the conditions and limits under which the exploration and use of the invention will occur.
Who is it suitable for?
This procedure is highly recommended for those who wish to expand in a cheap and unbureaucratic manner. The reason for this is that this practice generates income for the licensor in a very simple way, through the receipt of royalties. From this, the intellectual property can be popularized and expanded.
It is important to remember that, in this type of contract, it is not possible to transfer other rights, only the right to use the property. This contract is much more solid if the asset has been duly registered with the competent authority.
It is highly recommended that licensing not be done without at least a registration request, after all, you cannot license something for which you cannot prove ownership.
Why do it?
After all, why is it worth choosing to enter into a licensing agreement? Well, the great news is that this option brings benefits to all people and companies of all sectors and sizes.
As long as it is done correctly, this contract generates very interesting new opportunities. Check out the main advantages of using licensing for brands, products and intellectual works!
Possibility of generating passive income
When you decide to license something, you have the opportunity to earn passive income. By receiving royalties, you will earn extra money without having to worry about monitoring or managing that intellectual property. The most that needs to be done is to provide guidance on how to maintain the standard and, of course, monitor the results.
Possibility of expanding in the market
The licensor, depending on the strategy defined in the contract, also has the opportunity to achieve sales growth. Given all the knowledge of intellectual property, the public may be interested and, therefore, make other purchases, including directly from the licensor, depending on the venture. In addition, increasing the scope of the invention may favor future business. When the licensor launches something new on the market, for example, it will be chosen by a much larger audience. Therefore, there are many opportunities for expansion.
Increased recognition
Having licensed products, works or brands allows the invention to expand very quickly. This is the case, for example, with a brand, which will be recognized in the market very quickly. After all, it is possible to reach the business audience that hires and uses the creation.
If the licensing agreement is drawn up correctly, this makes the positioning very satisfactory for both parties involved. In this way, the creation is seen by the market in a way that is interesting to the licensor, being able to reach many more people.
Licensing contracts with VILAGE credibility
Licensing depends on negotiations between both parties, so it is necessary to create a complete document. To protect yourself, it is necessary to present all the conditions, such as concession periods, values and the intellectual property that is part of the agreement.
Licensing depends on negotiations between both parties, so it is necessary to create a complete document. To protect yourself, it is necessary to present all the conditions, such as concession periods, values and the intellectual property that is part of the agreement.
Furthermore, the civil or criminal code itself invalidates abusive clauses, since they exceed the rights provided for in the federal constitution. Thus, you may be harmed by ambiguous content, i.e., double meaning. This is why it is necessary to have intellectual property specialists to produce the licensing agreement, inserting the correct clauses according to the case in question.
Since this is not your or your company’s focus, it is common for doubts to arise about how to carry out all the steps. Without a doubt, hiring a company specialized in the subject is the most viable and safe solution.
VILAGE guarantees greater security and monitors every step of the process so that everything happens as planned. With the help of qualified professionals, you avoid errors and do not have to make corrections or delay the conclusion of the contract – after all, all of this costs money.
VILAGE’s focus is excellence in services, with experienced and specialized professionals to carry out all processes with total care and safety.
Furthermore, ensuring personalized service to customers, always considering each person’s needs, is also among our priorities.
Our services are all certified by BSI Brazil in the requirements for operating the Quality Management System in accordance with ISO 9001.
Frequently Asked Questions
There are 3:
- Licensor: that is, the party that owns the intellectual property of the character, software, brand, etc. It is worth remembering that this is the party that receives royalties on the economic use of the creation. Generally, the percentage varies according to each sector and, above all, according to each negotiation;
- Licensee: the party that uses, with due authorization, the invention of third parties. The required conditions are determined for each negotiation;
- Specialized company: since licensing is not the main focus of the company or person who wants to license the invention, it is common for there to be difficulty in creating and managing contracts. Therefore, the ideal is to use a company that specializes in the service. This way, everything happens in accordance with the legislation, without as many difficulties as bureaucracy.
See below what can be licensed:
- Trademarks (product or service);
- Copyrights;
- Industrial designs;
- Invention patents/Utility models;
- Software and applications;
- Personality rights;
- Confidential information and non-patented technologies (industry secrets).
Every license has a duration, except for perpetual use. In both cases, the contract can be terminated and the permission to use canceled, whenever one of the parties violates any clause established in the contract. Remember that some licenses must be renewed with each update of the creation so that the person can have access to the new versions. Others already have automatic renewal.
When we talk about brands and products known worldwide, it is very difficult not to mention the art of Romero Britto. The geometric and colorful works of the Brazilian artist have become famous worldwide and are the desires of many people. The artist has already licensed several creations to several companies, such as Grupo Carso and Disney. This allows the painter’s art to be used on decorative items, school supplies and furniture.
Another example is the famous cartoon Peppa Pig, a huge phenomenon among children. The character stands out when we talk about the licensing sector. After all, there are 28 licenses here in Brazil, for various activities and original elements. An example of a company that has licensed the character is BRMalls.
The intellectual property licensing agreement is a tool to increase production at a lower cost, to generate revenue and, especially in the case of brands, to disseminate it in the market. Therefore, licensing an invention is not only possible but, in many cases, recommended and even necessary, especially because the secret to success always involves creating an agreement that guarantees the owner of the asset adequate protection and guarantees.
