Sometimes a business seeks to maintain a differentiated market position by using intellectual property to exclude competitors. Other times, businesses seek to earn revenue through licensing agreements. Entities that specialize in research and development, such as universities and other research institutes, rely heavily on licensing to bring their discoveries to market. Licenses are typically for particular technologies or patents, and limited to specific geographical markets. License fees can be lump-sum, based on certain milestones, or a percentage. Licenses should be carefully documented so that each party understands its rights and obligations.
Licensing takes place against a background of alternatives. One alternative is to not use the intellectual property at issue. Another is to use it and hope that the IP holder will be unable to enforce its rights. Sometimes licenses are only entered into after litigation has begun, and each side has tested the strength of the intellectual property and its importance to the product or service. When contemplating licensing negotiations, it is important to keep in mind that litigation could result, and potential licensors should understand how the litigation could proceed.
Licensing can sometimes raise concerns under antitrust law—the law governing relationships between competitors, which seeks to maintain competitive markets and avoid collusion and unlawfully acquired monopoly power.
An intellectual property attorney can help evaluate your licensing options, including what the alternatives to a negotiated resolution would be. Intellectual property attorneys could also help evaluate whether there has been a violation of the antitrust laws in a company’s licensing behavior. If you are seeking to license your intellectual property or believe that someone is wrongfully demanding that you license their intellectual property, please contact Jonathan Rotter.