Experience the Legitimacy of Online Signatures for End User License Agreements in Canada

How to eSign a document: online signature legitimateness for End User License Agreement in Canada

all right you're working really hard you come up with a great idea you've got a little bit of protection maybe a provisional patent application you have this great idea you've got the marketing material you reach out to a company and guess what now it's time to get a licensing agreement so during this video I'm going to talk about what is a licensing [Music] agreement okay before we get started I have to give you thisp claimer I am not a patent attorney and I'm not giving legal advice what is a licensing agreement a licensing agreement is a legal contract between two parties known as the Lor and the lensey all right you are the licensor if you're the inventor and you're going to rent your idea to a company that is called the licy you're going to license your idea to a company and they are the leny and typical licensing agreement the Lor grants the ly the right to produce and sell Goods apply a brand name or trademark or use patented technology owned by the Lor which is you okay what is it it's a contract you're going to rent your idea to a company and every time they sell your product your idea they're going to pay your a royalty it's as simple as that all right I'm going to talk now a little bit about some of the terms terms in a licensing agreement so what's in a licensing agreement what are the terms everybody knows about the royalty rate right because everybody thinks about the royalty rate is the most important thing in a licensing agreement well yes and no I like to think the grant of license is probably one of the most important terms in a licensing agreement what do you mean Steve the grant of license what are you granting to that leny in order for them to pay you a royalty there it is really simple typically companies the lenses would like for you to have an issued patent and I know most of you don't have an issued patent and most ideas that get licensed only get licensed with a provisional patent application wow okay so in that Grant of license maybe you say look I've got a provisional patent application which is wonderful that's all you really need there might be some other things that could be included in that Grant of what you own maybe Trade Secrets maybe you know have knoow maybe you have a trademark maybe you have a copyright those things can also be in the grant of license here's the tip though if you can just have the product that you're licensing to the company in order to get paid I like that the best because it's not attached to any intellectual property I love that also make note if you can include in your Grant of license um improvements that you can make improvements and add it to it later that allows you to keep that door open to still get paid in case something doesn't issue there is a good trick all right wonderful okay I want to talk about another thing that's very important exclusivity you've heard about this before now exclusivity that means in some way you're going to give them an exclusive what does that mean that means only that company that you're going to license your idea to can do certain things and you're going to keep all other people that cannot that cannot do it that you're not going to give them a license in order to do things so you're giving them an exclusive that's you usually in a territory it could be distribution points it could be a lot of different things but overall most companies want to an exclusive they want to keep everybody out so they can they so they can have a monopoly and that's something that they truly do want but you have to realize there's ways to to negotiate where you give them an exclusive in some areas and maybe not other areas it all depends on your product okay what I've learned about this you really want to know what companies need to be successful and there might be some things that they're not doing or maybe areas they're not selling in which you could carve out take out still give them an exclusive in certain areas but take some other areas out in order for you to license it to other to other companies so that's a very important term another term that's very important are minimum guarantees I love that minimum guarantees it's basically like a gun to their head saying you got to sell x amount in order for you to keep that exclusivity wow that's wonderful you have to sell a certain amount to keep that exclusivity I like that that's to me is that per it's that's that performance Clause that I really like because it's attached to sales they have to perform in order to keep the rights to sell your product I love that now even if a company doesn't want an exclusive let's say they want a non-exclusive you can still have minimum guarantees for them to have to sell a certain amount of your product in order to have the rights to sell it at all so it's very important to understand minimum guarantees and and design those minimum guarantees so they can hit those numbers and that's a whole another discussion on what those minimum guarantees should be and we can do that at a at a later video okay what else is it a licensing agreement we talked about the royalty rate well we didn't really talk about it let's talk about it now okay everybody's worried about the royalty rate I think it's important I don't think it's the most important thing I like minimum guarantees the grant of license typically the average royalty rate is about 5% on the wholesale price it could be a little bit higher it could be a little bit lower okay but it's typically 5% on the wholesale price okay when a company asks you what do you want in terms of royalty rate and you haven't seen the contract yet it's really hard to negotiate that because there's things in this contract that might impact that royalty rate so you just can't throw out a number because if you give an exclusive that could impact that royalty rate if if uh if they're going to pay for let's say your patents that uh that might be a different royalty rate so there's things that do impact that okay so minimum guarantees are very important it keeps people making sure they're selling your product the royalty rates maybe 5% is very average um what else is in that licensing agreement it might be um who owns intellectual property well it should be you some companies might ask to own the intellectual property I think that's a big no no and the reason why in case the in case the contract goes null and void is they breach it um and if they made improvements you might have to license those improvements if for some reason you go your separate race separate ways so I'm not wild about it indemnification is another very important Clause indemnification what does that mean both parties are going to indemnify each other hold harmless on certain things I'll give you an example you're going to indemnify them if some if you happen if someone claims that you uh infringing on uh their intellectual property you come up with an idea and sure enough you license it to a company and someone says hey that's my idea you're going to be responsible to handle that situation and keep your lcy harmless they're not responsible you are because you have created the idea tried to protect the idea and you claim that is your idea so you're responsible that's pretty standard um they're going to indify you for all any of the manufacturing because you're not really involved in the manufacturing it makes perfect sense and deification is very important I would always always I would always have a licensing attorney help me with that particular clause and I'm going to talk about how to do this in a minute at the very end of how to manage a licensing agreement so what else is in a licensing agreement um audit Clause that will give you the ability to audit a company to make sure they're paying you the correct royalty rates it's always in every contract it's pretty standard I have never audited a company before but you will have the rights to do that and if there is a difference they have to make that payment sometimes there's interest and sometimes they even pay for the audit most likely you have to pay for it right so but if they owe you money in the terms of the contract they might have to pay for it and plus a little interest as well okay product liability insurance companies that you're going to license your idea to if they're selling at all the major ret retailers they have to have product liability insurance ask for you to be on the policy it's pretty simple it's almost required for them to have it it's pretty standard so make sure in the contract they do have that infringement okay let's talk about that let's say uh a company another company uh comes up with an idea similar to yours or let's say it's like yours let's say they they they do something that's very very much like yours or or it is like yours and they're infr ing there's going to be language in that licensing agreement of what do you do next right who goes after them um if for some reason they want they they require you to do it watch out for that language you should never be required you might have the first option but you should never be required to go after someone that has infringed okay there's another thing in licensing agreements I think is really interesting is what happens when things go wrong and they do go wrong maybe they miss a minimum guarantee or maybe something else goes wrong or maybe they don't make the Royal maybe they don't make the the royalty payment the contract breach they breach and if they do breach what happens there'll be language spelled out in that licensing agreement of how to cure that breach and you'll have to give them certain time give them a notice and they'll come back and they'll try to cure that breach if not some sometimes those contracts kind of you know they don't hold up they go away you send them a letter they breach you get all the rights back and you go your separate ways here's another termal licensing agreement that is important it's the length of the contract usually it's 2 to three years could be 5 years it could even be the length of if a patent's issued might be the length of a patent look at it very carefully and make sure that's acceptable to you most of the time there'll be a renewal clause that it might go for 3 years and then it will go another year if they meet the minimum guarantees I talked a little bit of over all some of the terms in licensing agreement trust me there's a lot more to it than what I just went over I would highly recommend that if you do if you do receive a licensing agreement have someone help you right I cannot tell you how many times i' I've seen people get in trouble when they try to do it themselves do not do that the right culmination here is find someone that can help you with the business terms how to negotiate minimum guarantees royalty rates improvements all the things that really have to do with the business aspect of it then at the very end I always bring in a licensing attorney to help me with some of the other legal EAS like the indemnification those type of things that would really keep me responsible U liable for certain things there you go all right I went over a lot this is Stephen key keep on watching these videos thank you for for subscribing down below tell your friends and I will see you next time on invent right [Music] TV