Licensing and Strategic Partnering

Companies have different strengths. The company with creative, technically trained executives may turn out marvelous products that they have little idea how to market, while other companies may be marketing whizzes with little product flow. Out of this may be born licensing or strategic partnering transactions.

Licensing
Licensing may involve patents, trademarks, copyrights (including copyrights in software), or trade secrets and know-how. Different legal doctrines and issues will arise in each of these types of transactions. The primary business issues that need to be resolved may include:

1. Is the license exclusive or non-exclusive?
2. What is the royalty rate? Are there any lump-sum license fees? Are they to be credited against future royalties?
3. What is the duration of the license?
4. For what field of use is the license being granted?
5. What territory is covered?
6. Who is responsible for warranty coverage and customer support?
7. Who is responsible for enforcing any intellectual property rights that may be involved?
8. Are there any performance targets, such as sales volumes, that the licensee must achieve to keep its license rights alive?

Strategic Partnering
Strategic partnering refers to special business relationships that, while close, are in fact something less than a true partnership. They typically involve one company assisting another in making sales to the first company’s customers. These relationships often involve the payment of sales commissions, and require particular attention to issues of quality control and customer support and maintenance. Since both companies will be selling to the same customers as a team, each company has an interest in how well the other satisfies the customer. (More)