Gift Focus - Mar/Apr 2019 (Issue 112)

understand the various licensing terms and what they mean. • An exclusive licence becomes the exclusive right of the licensee, and therefore you cannot use the design during the licensing term. • A sole licence allows both you and the licensee to use the designs. • A non-exclusive licence means that the licensee has the right to use the designs but cannot take action to prevent anyone else using the designs. • An exclusive licence means that the person granted the licence could take action to stop anyone else using the designs. Make a list of all designs to be included. This avoids any doubt as to which designs are covered. At the same time, clarify whether future designs are included. Copying – who takes action, and who pays the legal fees? Always ensure that the licence clarifies whose responsibility it is to take legal action against a copyist and who foots the bill. Royalties and audits – who pays for what, and how will it be managed? Ensure that the subject of how royalties are calculated and whether a royalty management system is in place are included. It is possible to agree a one-off lump sum, payments of regular royalties or a combination of the two in the form of an upfront payment followed by royalties. Many successful licensing relationships include a minimum guarantee for royalties in their agreements. Don’t forget, there can be a big difference between royalties calculated as a percentage of the retail-selling price as opposed to its wholesale price. A smaller percentage of volume sales is better than a greater percentage of insignificant sales. Agreeing the terms of a royalty management programme and including this in any licence agreement will ensure that there is compliance with the terms of financial reporting and decrease the likelihood of incorrect royalties being paid to the licensor. Which country? In a global marketplace, it is possible to licence different companies to sell the same design in different countries. Any licence should clearly state which country it covers and, importantly, which country’s law would apply. How long do you want the agreement to last? What happens if either party wishes to end the relationship? In the tricky world of a market dictating a product’s shelf life, it may be difficult to cater for market forces, but it is important that both parties have certain safeguards. Therefore, it is crucial to establish realistic licence dates – they can always be extended if required. Similarly, it is important to establish the exact criteria, should either party wish to end the agreement, so that the correct legal mechanism can be included. This is not an exhaustive list but gives a flavour of some of terms you should consider. ACID has worked with designers and manufacturers to create an industry-standard licence royalty agreement, which is easy to read and doesn’t contain overcomplicated legal jargon. This provides a level playing field between parties, allowing a fair framework for both to discuss any modifications and adjustments. Most importantly, a licence royalty agreement is based on actual court judgments to negate lengthy legal compliance and promoted as a basis upon which specific bespoke clauses can be added. ACID always advises users to consult IP lawyers before adding any additional clauses. The beauty of this is that you can reuse the template for different licensing partnerships. For further information visit, acid.uk.com or find Dids @ACID_tweets THE PERFECT GIFT FOR ANY OCCASION WWW.ANCIENTWISDOM.BIZ CARE@ANCIENTWISDOM.BIZ T: 0114 2729165