A licensing agreement is like any other legal agreement. You can’t just sign on the dotted line and fold up the agreement and put it away for safe keeping. Like a relationship, you must nurture all the parties involved. It’s a living, breathing and highly dynamic bond. Sure you’ve agreed to amounts, the frequency of payments, milestones, if any, and all the other details. But, as in life, things happen. What happens if one party doesn’t reach the milestone? Or goes bankrupt? What if there are manufacturing or shipping delays? What if the product composition or the amount of product isn’t exactly what you agreed upon? And, probably most commonly, what if the personnel change or the license gets shifted from the original department into some other department’s bailiwick? Yes, the license should cover most of these possibilities but sometimes things come up unexpectedly.
This is why, whether you are the licensor or licensee, it’s really important to develop and maintain your relationship with the other party since both fates might depend on it.
The Licensing Executives Society’s upcoming meeting deals with a lot of these issues. The focus will be on pharma, since that’s the 800-pound gorilla in the region. However, if you attend, there will be lots of valuable information to gleam. Here’s the link:
Here are some other examples of what can happen with copyrights, license rights etc.
My parting suggestion: Start a relationship with an Intellectual Property attorney who you trust. It’s always important to have a trusted and knowledgeable partner on your side.
Sandra Holtzman teaches CEO 035: Licensing.
She is the author of Lies Startups Tell Themselves to Avoid Marketing.
The Design Entrepreneurs NYC (http://www.designentrepreneursnyc.com/) program is in full swing. One of the programs’ many offerings is an open classroom “mentoring” evening, where designers in the program can swing by and ask questions of instructors who are there for that purpose. It’s a great and informal way to get multiple opinions, points-of-view and advice on the designers’ company, business plan (which they write as part of the program) etc.
This recent Wednesday evening I was co-mentoring with Shawn Grain Carter, who teaches Fashion Merchandising and Marketing at FIT. The subject, as often happens, was brought up of designers negotiating with big companies – this could mean, contracts, licenses, royalties, intellectual property, employment, or all of the above. Many design entrepreneurs do these negotiations alone. Sometimes they feel they have enough knowledge to negotiate well for themselves. Sometimes they don’t know any better. Sometimes they don’t have the money to pay an attorney to go with them to help and advocate for them (and to keep them out of trouble). We discussed this in class and Shawn and I agreed that an entrepreneur absolutely needs an attorney to accompany them to such negotiation meetings. Or a business person, like an accountant. Or both. And Shawn advised everyone, and I agree, that they should have double A’s – an accountant and an attorney. They both keep you safe in any kind of business negotiation.
It’s a necessity in the fashion business but also in every sector. At the very least, there’s a second pair of ears listening to what’s going on and picking out important points that the entrepreneur might miss. At the very most, your A-team keeps you from making costly, and sometimes business-ending, mistakes. The world is littered with stories of failure because the entrepreneurs couldn’t or wouldn’t bring an attorney or accountant into a crucial negotiation (and, let’s face it, every negotiation when you’re a small business is crucial) with them.
I know you’ve heard me say this before…but repeating it never hurts…always use an attorney and/or accountant in contract reviews, negotiations, any business matter. The fees you pay your Double A-Team are minor compared with the money they save or help you get in the long run.