By,
Henry “Hank” Abromson, Esq.
Introduction
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Henry “Hank” Abromson
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Attorney with Miles & Stockbridge P.C. (Frederick)
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Intellectual Property, Corporate, Commercial
Transactions, Cyber/Computer Law
Transferring Intellectual Property
License v. Assignment
 Assignment
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 Selling the farm, all of your right, title and
interest in and to the property
 Flat rate payment
 Not typically concerned with what happens
to the rights or with a return of the rights;
Can have a reverter.
Transferring Intellectual
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Licensing
 Typically maintaining your rights in and to the
original, protected work
 Lending or leasing a third party to use or exploit
one or more of your rights in the bundle of rights
 Typically concerned about recovery of rights,
protection and use of the rights, maintenance of
the rights, and protections if the third party
damages or harms you or your rights through
such use.
 Licensing your rights is like letting your friend
borrow your favorite toy for a fee.
Transferring Intellectual Property

Licensing can be a valuable tool
 Possess a protectible invention, work or
mark that you don’t want to take the time,
effort or expense to exploit but want to
monetize it (trademark apparel, software
development, patented invention)
 Licensing can be the core of your business
model, with royalty income as your leading
driver of revenue
Licensing Terms
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License Grant
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Don’t get lazy, be specific and clear
What types of IP are being licensed
Is this an exclusive or non-exclusive license
Define the territory exp. U.S., Worldwide
Revocable or non-revocable
On-going royalties or “paid-up”
Transferrable or non-transferrable
Sublicenseable or not sublicenseable
Perpetual or limited term
Licensing Terms
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Be Aware of What You are Licensing
 Be specific to mention the rights
 Each type of IP has its own unique bundle of
rights
 Copyright – use, reproduce, display,
perform, make derivative works, sell etc.
 Patent - exclude others from making, using,
offering for sale, selling, or importing into the
United States the invention claimed in the
patent
 Trademark – Use
Licensing Terms
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Exclusive or Non-Exclusive
 Can you license to others or just to this
licensee
 The more exclusivity, the greater the royalty
rate because the less opportunity you have
to drive in revenue from other licensing
sources
Licensing Terms
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Territory
 Depending on what type of IP is involved,
the product or the market, will likely
determine the territory
 Sometimes cost prohibitive to take the
license internationally, sometimes it might
risk the rights, sometimes it makes sense
 The broader the territory, typically the
greater the royalty rate
Licensing Terms
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Term
 How long do you want the license to be in
effect?
○ Short term, long term, short term with
automatic renewable terms
○ Renewals can be based on revenues
○ I prefer to not have client be locked into long
term agreements because you never know
what the future will hold, but it can make
sense
Licensing Terms
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Negotiating Royalty Rates
 No hard and fast rate; dependent on many variables
 There are books that list common rates, but it really depends on
the situation
 Typical variables:
○ Uniqueness of product, competition
○ Value of the IP on the market (think valuable trademark and
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franchising)
Common rate in the marketplace
Effort and expense into the R&D
How long is the term
Exclusivity
Territory
Remaining life
Are the rights protected through registration, are they strong
Based on gross or net revenue
Sublicensable
Licensing Terms
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How and when will you be paid
 Flat rate up front
 Ongoing royalties
 Both an upfront payment and ongoing
royalties
 Quarterly, Annually, Installments, Lump Sum
Licensing Terms
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Key Protections
 Indemnification – Reimbursement of costs if the
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licensee gets you sued or harms you as a result of
its actions or inactions
Audit Rights – Financial (books and records) and
Quality Assurance (no harm to your brand through
bad products or misused IP)
Representations & Warranties – Authority, no
infringement, solvent, no legal claims against, no
prohibitions from entering agreement
Governing Law, Jurisdiction and Venue – Ensure
home field advantage
Termination Provisions - What rights do you have to
terminate, what rights do they have.
Questions
Henry “Hank” Abromson
 Miles & Stockbridge P.C.
 Tele: (301) 698-2325
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Email: habromson@milesstockbridge.com
THANK YOU!