​A licensing agreement is a contract in which you, the licensor, gives someone else, the licensee, permission to do something that they otherwise would not have the right to do. There are many situations in which a small business might use a licensing agreement:

• If your business is only reaching customers in a particular region, you might enter into a licensing agreement with another business to sell your products or services in a different region. 
• If your business develops software, you are typically giving end users permission to use the software in a particular way, but you are not selling the underlying code that makes up the software. (This is also true of businesses that operate under a software as a service or SaaS business model.)
• If you create content for others, you have to decide whether you are giving up all of your rights in that content, or simply giving your client permission to use that content (in which case, you retain the right to re-use that content with another client).
• If your business has a proprietary process or patent rights in a particular technology, you might monetize that confidential information by giving another business the right to use that confidential information.
• If you franchise your business or offer a business opportunity, you are licensing your brand for someone else to use.

​While licensing agreements need to be customized to fit your particular business situation, there are some common terms that most licensing agreements should address.

Over the lifespan of a small business, you may find yourself needing to sell or transfer intellectual property rights. There are a variety of situations where this might come up:
​

• The trademark or copyright was registered in the name of an individual owner instead of the business. (Because this can be an incredibly valuable business asset, most of the time, the intellectual property should belong to the company and be registered in the company’s name.)
• The intellectual property rights are being sold in connection with the sale of all or part of the business.
• The trademark or copyright is being used as collateral to secure a debt.
• The company is merging with another business, and the intellectual property rights need to be transferred to the other business (or sometimes a new entity created out of the merger).
• The business entity (or sometimes individual) that owns the trademark or copyright undergoes a name change, and the registration simply needs to be updated.

​Even though intellectual property rights are intangible, they can still be sold or transferred much like any other business asset. This week, we look at how to transfer ownership of these assets.  Except for name changes, we first need an agreement between the parties describing the terms of the sale or transfer. Then, we need to record the assignment of the intellectual property rights in the appropriate office.

(Note: Licensing intellectual property is not the same as transferring ownership. Licensing deals with a temporary right to use intellectual property, not a change in the underlying ownership.)

The bundle of rights associated with the concept of “copyright” exists from the moment a work is created in a fixed form. However, those rights generally belong to the creator or author of the work. So what happens when that author is someone you are paying to create the work for you, your business, or non-profit?

We’ve previously discussed protecting your brand by registering and enforcing your trademarks. But what about the unique content you create? Enter copyright law. Copyright protects “original works of authorship.” This can be anything from written works like books and articles, to musical and artistic creations, even computer programs and architectural plans. Copyright is an important area of law, not just for creatives, but any entrepreneur who creates content or uses content created by someone else. 

Just what does copyright protect? And why should you register your copyrights?