To avoid infringing another person’s intellectual property rights, you can only use someone else’s material if they provide you with a licence to do so or if they assign their intellectual property to you. If in doubt, check with an IP lawyer.
What is licencing?
If someone licences their intellectual property to you, this means that they are granting you the ability to use their intellectual property subject to a range of terms and conditions. You are not being granted ownership of the intellectual property and you will most likely have to pay the owner royalties (licence fees) for the use of their intellectual property.
In order to licence intellectual property, the owner will most likely draft a licence agreement that you and the owner will have to enter into. Licence agreements are fairly straightforward legal documents that can cover the following points:
- Permission to develop, manufacture and market products using the owner’s intellectual property;
- Where and how you can use the intellectual property;
- The royalties that your use of the intellectual property will attract;
- A description of the rights of the owner to inspect your records when using their intellectual property;
- Whether or not you can sub-licence the intellectual property;
- If there is any confidential information regarding the intellectual property that you cannot disclose.
If the owner of intellectual property has provided you with a licence agreement, you can get this agreement reviewed by an IP lawyer. An IP lawyer will be able to closely analyse each term and condition in the agreement to provide you with a thorough understanding of your rights and obligations under the agreement. An IP lawyer can also tell you if the terms and conditions are fair and reasonable in terms of your legal interests.
What is assignment?
Quite different from licensing, assignment occurs when the owner of the intellectual property transfers ownership of the intellectual property to you. In this case, you will gain full rights to use the intellectual property in any way you wish, to further assign it to someone else and to gain revenue from the commercialisation of the intellectual property.
There are many ways in which payment for receiving the assignment of intellectual property can be arranged. For example, the owner may ask you for a lump sum payment in exchange for the ownership of the intellectual property. This lump sum payment may cover the costs of developing the intellectual property, the profit that you may make in using it and the market value of the intellectual property. However, you may like to pay for the assignment of the intellectual property in instalments that are similar to paying the former owner royalties. For example, instead of having to pay a large lump sum amount to the former owner of the intellectual property, which you may not be able to afford, you can pay the former owner royalties for the use of the intellectual property until the purchase price is finally paid off. In this case, your payment of these royalties can be dependent upon the success and profitability of the intellectual property in the marketplace.
Depending on how you would like to have these rights assigned to you and the payment structure you prefer, you should negotiate with the owner of the intellectual property accordingly. It could be in your best interests to speak with an intellectual property lawyer to help draft terms and conditions to reflect your goals in terms of this arrangement.
There is a huge difference between licensing and assigning intellectual property rights. In order to be sure of what you have been given rights to do, we suggest seeking legal advice from an IP lawyer.