Intellectual Property Licensing Customs and Practices

The first step in examining licensing customs and practices is to review the license agreements between the licensor and the licensee in order to identify key clauses and to comment on the following two aspects:&nbspFirst, as to whether this may be construed as a franchise agreement based on our knowledge and understanding of current industry customs and practices and, second, as to whether key clauses found in the agreements are typically part of other standard license agreements.

In order to meet the test of a standard franchise agreement, the following three key components must be present:

• A grant of use of a trademark and associated intangible assets
• The charging of an ongoing fee for the use of those assets
• A prescribed operating system or operating plan describing most, if not all, aspects of the franchisee’s conduct of its business

The first two tests listed above are universally accepted to be uniform components of both license and franchise agreements.  The third test, regarding a prescribed operating system/plan, is the key area of differentiation between license and franchise agreements.  Based upon our over 20 years of analyzing and negotiating license and/or franchise agreements, and our knowledge of current industry customs and practices, we can identify whether or not the license agreements meets this third test.

Clients: Karen Neuburger, Mudd Jeans, Coleman/Fleetwood, Amazon.com