HOW TO USE INTELLECTUAL PROPERTY
DO IT YOURSELF.
The main purpose of an agreement to license intellectual property is to give entrepreneur-licensees permission to do what they want and need with that property. The risk is that if you’re not knowledgeable enough to build appropriate permissions—related to duration and parameters of use, for example—you’re asking for trouble, says Marc P. Misthal, an attorney and shareholder at Gottlieb, Rackman & Reisman, an IP law firm in New York City. “If you license a photograph to use on your website and brochure, you cannot legally use it on a promotional backpack,” he says, noting that such usage assumptions among licensing neophytes are typical. “You can’t forge a good deal unless you know what you want.”
A licensing agent, entrusted by IP owners to make deals, is one conduit to help your licensing quest. “These agents know what it takes to secure an agreement, and they’ll want to see a proposal from the potential licensee to evaluate,” says Misthal, adding that redos are not uncommon. Entrepreneurial clients of Jack Morrow’s Out of the Box pay both a monthly retainer for his expertise in identifying—and pursuing—suitable licenses and a commission on royalties for licenses secured. The ROI is that good licensing agents are more attuned to matters that affect newbie licensees, such as: Would you even be deemed a suitable candidate by the IP owner?
Because of the specificity of IP law, Misthal advises budget-minded, license-seeking entrepreneurs to negotiate and work out the bulk of a deal with licensers and agents. “When you’re nearly ready to sign the license agreement, hire an intellectual property attorney to review the agreement and tell you what needs to be added and omitted,” he says. Good IP lawyers ensure that contracts spell out who’s responsible for what, and address topics such as exclusivity, disputes, and even jurisdiction and venue in case of a lawsuit. Once you know the issues that need to be fixed, you can again hire the IP attorney to revise the contract. But many businesses don’t realize they need a written agreement. One company hired Misthal’s firm after it had used, without a licensing deal, a photograph lifted from a website, and the agency representing the photographer sent a bill. “Entrepreneurs like using stuff for free, and licensers are onto them,” says Misthal.