Exclusive vs. Non-Exclusive Agreements

Whenever possible, the parties should attempt to engage in a non-exclusive license. This provides benefits for both the licensor and the licensee.

Firstly, there is less risk involved for both parties; the licensor is not dependent on the success of one product, and the lower licensing fee minimizes the risk of the venture for the licensee. In addition, the licensor retains more control over the product.

Furthermore, the reduced royalty fees reduce the cost of the product, which can increase the market share. Lastly, licensing to several companies increases the likelihood that improvements on the technology will be made; these improvements can benefit the licensor and all the licensees.

If the licensee desires an exclusive license, the licensor should ensure that several criteria are met. Firstly, the licensor must consider whether an exclusive license is the best way to exploit the potential of the technology. In addition, substantial research should be conducted into both the technology and the licensee to ensure that the resulting product will be clearly superior to its competitors and will be able to garner a large market share.

Finally, the licensor must be persuaded that the licensor has the marketing and production resources to make the product successful, and that the licensor is willing to commit these resources. The licensor may also wish to consider limited period exclusivity.

Small Business Growth Strategies

Managing Intellectual Assets of Your SME

IP Strategy

Guidelines on Technology Management for SMEs

Enterprise survey and technology auditing

Formulation of a Technology Strategy

Development of a Technology-driven Business Strategy

Improvements on the Technology

Both parties should carefully consider the proprietary rights of improvements made to the technology during the license term. It is beneficial to the licensor gain rights to any improvements made by the licensee. Likewise, it is beneficial to the licensee to gain rights to any improvements made by the licensor.

Furthermore, if the license is non-exclusive, the licensee may also be able to incorporate improvements made by other licensees. The rights to improvements may be included free of charge with the license, or the license agreement may stipulate a payment to be made by either party in return for intellectual property rights for the improvements.

Model Agreements

Non-Disclosure

Sample Cooperative Research Agreement

Sample Confidentiality Agreement

Joint Venture Agreement: a Checklist

Sublicensing

Unless the agreement specifically states otherwise, the licensee is not allowed to sublet to other parties. The licensing party should be aware that it may lose direct control over the technology if the licensee sublicenses the intellectual property. If sublicensing is allowed, the terms and conditions should be explicitly stated in the agreement.

IP for Competitiveness

Licensing of IPR

Turning Your Inventions into Profit-making Assets