Software, IP and Brand Licensing

Licenses are a specialized form of contracts. In the typical business contract, physical goods or services are exchanged for a purchase price. The purchaser then “owns” the goods or receives the services and pays the agreed upon amount for them.

In licensing transactions, the “licensor”, which is the owner of the software, other intellectual property such as a trademark or patent (“IP”) or a brand like a cartoon character, does not transfer ownership. Instead the licensor allows the “licensee” to merely use the software, IP or brand under specified conditions.

For example, an original equipment manufacturer (“OEM”) of smart phones needs to license numerous pieces of software from various software designers/vendors – otherwise the phone will not work. The OEM does not gain ownership of the software embedded in the phones. Rather the software vendors grant the OEM a license to integrate their software into the operating system of the phones.

An example of a trademark license: the National Hockey League may decide to grant a license to a manufacturer of hockey equipment to place the NHL logo on every piece of equipment for a specified period of time and in certain markets. The manufacturer/licensee typically pays periodic payments, known as “royalties” to the licensor calculated based a percentage of the total sales of the equipment, with deductions for taxes and product returns.

An example of a brand license: a movie studio creates cartoon characters and licenses various manufacturers to create children’s action figures and dolls based on the characters.

The Hoeller Law Firm’s clients include software designers/vendors and licensors and licensees of IP and brands. Just like with contracts, we represent clients in multiple industries in domestic and international transactions.