There are several ways that an inventor may be compensated for the use of their idea.
If a company licenses a product, it is common business practice for the arrangement to be recorded in a document that all parties can sign and retain. This document is normally a license agreement that by definition is a written understanding between two or more parties concerning the invention or new product idea.
A license agreement is a clear understanding of what the obligations are of each party and also serves as proof of what is owed to each of the receiving parties. If at any time there is a dispute between the parties, it's the license agreement that the parties rely upon as the statement of their rights and obligations.
Below is a list of terms and conditions that are generally included in the outline of a license agreement.
- Parties to be included in agreement (referred to as the licensee and licensor)
- Description of invention
- Territory rights
- Intellectual property rights
- Grants
- Obligations for licensor
- Obligations for licensee
- Termination
- Payments
- Quarterly statements
- Books and records
- Independent parties / indemnification
- Confidentiality
- Notices
- Construction
- Sub-licenses, assignments
While each license agreement may be specific to a particular negotiation, it is important to understand that without one in place, serious issues may arise. The old belief that a handshake is good enough would probably not be good advice when dealing with today's legal environment.
At Davison, we negotiate license agreements and through experience have acquired good knowledge on what should be included in the license agreement. You may be able to secure a license, either on your own or with the assistance of another party, but Davison will not be able to work with you at this juncture.
Once all parties agree to the terms and sign the agreement, each party receives a copy of the agreement for their records.
If your goal is to have your invention prepared and presented to a corporation in hopes of getting a license agreement, we recommend that you fill out our free information form and we will send you free information on how to get started.
