Licensing new technology and leveraging exclusivity

Licensing new technology and leveraging exclusivity

4962712_sIf you’re a leader in your tech startup company, you have undoubtedly invested ample amounts of time, research, and money to ensure that you’re offering the very best product you can deliver. Your intellectual property is probably your most valuable asset and provides you with a competitive advantage in the marketplace, and that fact alone can embolden any technology venture.

When you’re licensing your technology, however, it is imperative that you stay current on the latest legal options to capture the best leverage with your counterparty and with the market as a whole. Just as you’re regularly maintaining and upgrading your technology, the law is ever-evolving in accordance with the changing times. This means you can easily fall out-of-date, leaving you at risk for losing out on the best possible position in the market.

What’s Involved in Licensing New Technology?

By nature, the products your tech startup are creating are intellectual property. That is to say, you’re part of a world of creations and innovations, and your products and services are protected by intellectual property law, which is designed to protect both your company (the inventor) and your technology (the invention.)

As you begin to explore the distribution of your technology, it is imperative that your software code, patents, and copyrightable material be properly protected. Although you may be tempted to put the focus of intellectual property law on the back burner as a result of its complexities, the more attention you pay to your licensing agreements, the more protected your business will be.

If you’ve been fortunate enough to secure a strategic alliance by way of a corporate partnership, you should consider the following possibilities:

  • The corporate firm may request long-term exclusivity. Should this occur, you must weigh the opportunity cost against the possibilities that may otherwise exist in the grander marketplace.
  • You may negotiate a temporary cooperative deal with a larger firm whereby your tech startup can utilize the brand presence and marketing bandwidth of your corporate partner. During this time, you can secure valuable research data, gain feedback to usher improvements in your product, and prove overall marketability. Be mindful, however, that without a proper licensing agreement in place, you could lose the ability to re-market your own product after the partnership has ended.  This can be especially true with respect to upgrades, improvements and other derivative works made during the partnership if your licensing agreement does not specify that you retain all rights to these items of intellectual property.

Alternatively, you may wish to take your IP directly to market. This is often the most viable option for companies that haven’t yet secured corporate backing or do not yet have the statistical evidence to validate the investment of a partnership from a larger firm. In this case, you must ensure that you’ve enlisted stringent intellectual property law protections to guard against reverse-engineering and other potentially damaging activities.

How Can You Leverage Exclusivity for Your Tech Startup?

During contract negotiations, your leverage comes from showing that you have exclusive ownership of a technology that is a valuable asset. Retention of exclusive ownership requires ensuring that you’ve clearly defined the scope of your licenses, definitively outlined the user restrictions, and set procedures in place so that you can pointedly discern whether your licensees are in compliance. In the event of non-compliance, your ownership will be upheld so long as you have a properly constructed license agreement in place.

Any tech startup should partner with a law firm that understands the intricacies of technology licensing. At Douglas Park Law, this is one of our core practice areas. Contact us when you are ready to learn more about how our technology licensing services can benefit your tech startup.

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