Because a license agreement defines the relationship between the owner and licensee, it is important that this license agreement defines the parties’ responsibilities, rights, liabilities, and remedies. While many businessmen favor a “simplistic” type of license agreement, these simplistic agreements can often create more problems than they solve. Overly simplistic agreements will frequently fail to address the types of problems that will come up during the licensing relationship. In the end, this failure to address and resolve problems may well cost both parties dearly in lost time and attorney’s fees.
In this “new millennium” of information and technology, even small businesses have jumped into international markets. When your business considers entering an international license, it is important to consider your business options and evaluate the legal and practical implications as well. One of the first items that a company should contemplate when considering international licensing is its current intellectual property protection. Generally, companies have secured only United States trademark, copyright, or patent protection and should increase its intellectual property protection in these other countries. Furthermore, a company needs to recognize that channels of distribution vary from territory to territory and account for these differences. Finally, a business must determine whether to license the product for one or more languages; whether the license agreement should account for fluctuations in foreign currency; and, whether the payment of any value added, local, or national taxes are applicable.