Intellectual property, like real property, can be bought or sold. The owner can also license a third party to operate within the scope of intellectual property rights. This transferability of rights is used in various ways to achieve business goals.
Businesses often acquire intellectual property rights in technologies that are no longer useful to the company in the conduct of its own business. However, these intellectual property rights may be of interest to other companies that may be interested in purchasing or licensing the property rights, often with the know-how that is necessary to commercially practice the technology. The company may also own the rights to technology that is used in the company's business, but which has applications in non-competitive businesses. In these instances, companies often grant "field-of-use" licenses to companies in other lines of business in exchange for a royalty, which is commonly determined by the licensee's sales revenues.
Intellectual property can also be valuable "trading material" if the company becomes involved with a competitor over intellectual property rights. Such disputes are often resolved by cross-licensing of technology with each party granting the other the right to practice under certain property rights. Obviously, it is necessary in these deals for each party to possess rights that are considered valuable by the other party.
Instead of developing technology internally, companies are also increasingly turning to licensing of technology from other companies, universities, etc., that have already undertaken the research, thus reducing the cost, uncertainty, and time to the market.
All licensing agreements are necessarily complex due to their long-term nature and the fact that external factors often significantly influence their performance. Therefore, care and experience is required to ensure that the results of the license are as desired, or that an exit is available, if significant changes in circumstances occur. MacCord Mason PLLC attorneys have considerable experience in providing this guidance.
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