Industrial Design Licensing

Introduction

The concept of industrial design licensing involves a patent owner (the licensor) granting another party (the licensee) permission to use an industrial design legally for commercial purposes. While the licensee is permitted to utilize the design, the licensor retains ownership of the design rights. This process effectively turns an idea into a tangible product.

The holder of an industrial design can transfer the right to use that design to other parties, either wholly or partially. Acquiring this right typically requires a license agreement, which must be documented in writing and signed by both parties involved. The licensee may grant sub-licenses only if expressly stated within the agreement. Additionally, in the case of infringement, the licensee has the right to initiate court proceedings regarding the infringement of rights associated with the industrial design.

Steps To Identify Industrial Designs

• Identify and Evaluate Potential Licensees
• Negotiate and Draft the License Agreement
• Register the License Agreement
• Monitor the License Agreement
• Understand Benefits and Considerations

License Contents

1. Background - Parties and Their Intention

This section introduces the licensor (design owner) and the licensee (recipient of rights), detailing their intention to enter into this license agreement. It clarifies the purpose of the license, which might include allowing the licensee to utilize the design for defined applications.

2. Definition

Important terms such as “design,” “territory,” and “royalty” are clearly defined in this section to ensure both parties have a mutual understanding of the agreement's language. Proper definitions help to avert potential misunderstandings or disputes later on.

3. License Grants

This part specifies the rights granted to the licensee, including whether the license is exclusive or non-exclusive, the geographic scope, and the permitted uses of the design. It clearly defines the boundaries of the licensee’s rights.

4. Dates

The agreement stipulates the start and end dates of the license, along with any renewal provisions. It may also include deadlines or milestones that the licensee needs to adhere to as part of the agreement.

5. License Issue Fees, Payment, and Types of Transactions

Financial terms are outlined here, detailing the license fee, royalty structures, and other payments. It specifies payment methods, due dates, and potential penalties for late payments if they are applicable.

6. Warranties

Warranties offer assurances, such as confirmation from the licensor regarding their ownership of the design, and a commitment from the licensee to follow the agreed-upon terms. This helps build trust between the parties.

7. Technical Assistance

If the licensee requires technical support to utilize the design, this section outlines the assistance the licensor will provide. It specifies the type of support, duration, and any associated costs.

8. Terms on Termination

This section describes the conditions under which the agreement can be terminated, including breaches of terms or mutual consent. It also outlines the responsibilities of both parties post-termination, such as the return of confidential materials.

9. Infringement Clause

An infringement clause outlines the procedures that will be followed if unauthorized use of the design occurs by a third party. It may require cooperation between the licensor and licensee on legal actions to protect the design.

10. Dispute Resolution and Bankruptcy Clauses

These clauses establish the mechanisms for resolving disputes, often through arbitration to avoid protracted court proceedings. The bankruptcy clause details the consequences if either party becomes insolvent during the term of the agreement.

11. Right to Sub-License

If allowed, this clause grants the licensee the right to issue sub-licenses to other parties. It typically outlines the conditions and limitations under which sub-licensing is permitted.

12. Transferability Clauses

This section addresses whether the license can be transferred to another party. It often includes conditions, such as requiring the licensor’s approval before transfer.

13. Rights and Obligations of Parties

This outlines the duties of both parties, such as the licensee’s obligation to pay fees and the licensor’s duty to ensure that the design is free of infringement. This ensures clarity regarding the roles of both parties involved in the agreement.