Understanding how to protect and grant licenses to use creative content

If your company produces information or original works or has intellectual property (IP), you likely know that it is protected under copyright laws. 

There might be circumstances in which you want to provide licensing to another party to use your copyrighted material. As the copyright owner, you have the authority to do so.

However, it is essential to ensure that you continue to protect your business when granting a license to use your creative content. 

Licensing Provisions 

Licensing agreements are contracts that give the purchaser rights to use the IP in some way if certain conditions are met. They do not involve selling the IP, only providing for its use by the other party. Parties granting the license or licensors have the right to dictate how the party purchasing or licensee the license can use it. Licensing provisions can include things like: 

• The scope of the material being licensed.
• Quality control standards for its use.
• What purposes the purchasers can use the license for ?

• How long the license will be in effect?
• What would trigger termination of the contract?
• How disputes will be handled.

These provisions or any others the licensor decides to include function like contracts within contracts. Should the licensee not abide by one of these provisions, they can cause the entire contract to be void.  

What Rights Can a Licensing Agreement Include? 

Individuals or businesses have intellectual property rights over their creations. When something new is created, the law generally gives the creator an exclusive right to its use for a specific time period. Companies can pick and choose what IP they want to license and exactly how they want to license it and grant certain rights. Their rights can be granted to the licensee and might include any of the four IP types: 

Trade Secret Licenses 

Trade secrets are the proprietary methods, structures, formulas, strategies, or other information that is confidential and is not purposed for unauthorized commercial use by others. Trade secret protection is critical for helping businesses gain a competitive advantage. Companies have the right to control how, where, and when the licensee can use their trade secrets through a contract. 

Trademark Licenses 

A trademark is a unique sign that allows consumers to identify a particular company’s goods or services easily. Some examples include Amazon’s signature A trademark, Dominoes’ signature domino, or Ford Motor Company’s memorable blue oval and F. A trademark can consist of words, letters, phrases, symbols, smells, sounds, or color schemes. Trademarks can protect a set or class of products or services instead of patents that just cover a single process or product. If a licensor grants a trademark license, it gives another company the right to use its trademark. 

Patent Licenses 

A patent prevents IP from being created, sold, or used by another party without the creator’s express permission. The patent owner has the right to commercialize their patent. This can include buying and selling the patent or authorizing a license to the invention to any third party under through a licensing agreement with mutually agreed terms. 

Copyright Licenses 

A copyright does not protect ideas. However, it does cover “tangible” forms of creation and original work such as music, art, architectural drawings, or software codes. The owner of the copyright has exclusive rights to sell, publish, and/or reproduce any musical, literary, artistic, dramatic, or architectural work created by the author. With a copyright license, the licensee gains the right to reproduce and sell a copyrighted asset. 

Using Personal and Commercial License Agreements 

The best way to ensure IP is protected and to avoid accidental infringement is to use personal and commercial licensing agreements in a legally binding contract. Within this contract, the rights and expectations of both the licensor and the licensee should be clear and comprehensive. If something is missed in this agreement, companies could be putting their IP at serious risk. Since many companies are not highly familiar with licensing agreements or contract laws, enlisting the services of a business attorney can be extremely helpful.  

Hire a Business Attorney to Help Protect Your Company’s IP 

Licensing agreements can be beneficial to both the companies that grant them and to their licensees. However, they must be drafted correctly and thoroughly. You need an advocate who understands the importance of IP to your business but also all applicable IP rights and laws. 

Hiring a knowledgeable business attorney who can understand your goals and draft your licensing agreements is invaluable to the livelihood of your business. If you are considering granting rights to some of your company’s IP, be sure to discuss your situation with an experienced business attorney. 

Doug Griess and John Snow of Hackstaff & Snow, LLC, are top Denver business attorneys with expertise spanning various industries. Specializing in business law, litigation, intellectual property, tax law, and dispute resolution, John Snow and Doug Griess offer an in-depth understanding and knowledge of general corporate rules and regulations and are a trusted resource for business owners throughout Colorado.