In "Ballet as a Brand? How to bring More Money into Dance for Companies and Dancers" 13 March 2014 I argued that more could be done to raise funds and indeed dancers' incomes by harnessing the enormous goodwill enjoyed by companies, theatres and individual dancers. In "Protecting the Brand" 31 March 2014 I counselled companies, theatres and dancers to protect their goodwill by registering their names, logos or other signs as trade marks. In this article I discuss the legal instrument by which the goodwill is monetized. That is to say the licence.
Watch the Spelling
In the UK and most other English speaking countries the noun licence is spelt with a "c" and the very "to license" with an "s". In the United States, however, both the noun and the verb are spelt with an "s". The distinction between the verb and the noun is a very convenient one but some people including, sadly, even a few lawyers find it confusing and get mixed up.
What is a Licence?
A licence is another word for permit or consent. A familiar example is a TV licence that allows us to watch television. Without such a licence it is unlawful to watch a live broadcast in the UK however it is transmitted. There are also licences that permit us to do something for which we would otherwise be sued like park a car on someone's land. The sort of licences that we are talking about are intellectual property ("IP") licences.
What is IP?
IP is the collective name for the bundle of rights that protect investment in intellectual assets. Intellectual assets are such things as books, goodwill, inventions, performances and software that have been made by creative or inventive people. Examples of IP rights are patents for inventions, trade marks for the signs by which the public recognize a supplier or his or her products in the market place, copyright for literary and artistic works and rights in performances for the right to film, tape or broadcast an actor, dancer or musician's performance.
What is an IP Licence?
That is a licence to do an act such as sell a product or supply a service under a trade mark or film or broadcast a performance by a dancer that is restricted to the IP owner. Without such a licence, such a person can be sued by the trade mark owner or dancer. Licences can be oral or written and they can arise expressly or impliedly. However, most IP licences are in writing and drafted by specialist lawyers.
Types of Licence
Licences can be exclusive, non-exclusive or sole.
Exclusive licences are those in which an IP owner ("the licensor") transfers all his or her rights in the IP including the right to prevent others from exploiting the IP to the person to whom those rights are granted ("the licensee") with the result that the licensee can prevent anyone in the world including the licensor from exercising those rights. Many agreements to make and sell goods bearing a company's name, logo or coat of arms in a specified location are exclusive licences.
Non-exclusive licences are those in which more than one licensee (and, of course, the licensor) can exercise the rights that are granted but only the licensor can prevent third parties from exercising the rights. Software is usually supplied to end-users under a non-exclusive licence known as a "EULA" (end user's licence agreement").
Sole licences are non-exclusive licences in which the licensor agrees to grant only one licence.
Licensing your IP
Before you enter negotiations for a licence it is a good idea to read the Intellectual Property Office ("IPO")'s booklet on Licensing IP in the IP Health Check series. The IPO has also published a Skeleton Licence or check list of the terms commonly found in licence agreements. The provisions to which you should give particular attention are as follows:
- What exactly are you licensing and how is the licence to be exercised? For instance, is this to be a non-exclusive licence to print you logo or image on t-shirts and sell those t-shirts in the UK. Do you want your licensee to be able to make other products or export them? If so, how will that affect your agreements with licensees elsewhere? Also, are those foreign licensees allowed to export their goods here in competition with you or your British licensee?
- Quality Control. You have put a lot of effort into building up a national and international reputation and you don't want it trashed or trivialized. Any goods bearing your name or logo must be made of good quality materials with high standards of workmanship and they must be packaged attractively. But how do you make sure that is done? And what are the consequences if it isn't?
- Defending and Enforcing the IP? Which party is responsible for the legal fees if a third party infringed the IP or challenges its validity. Legal fees can mount quickly in litigation, particularly in the UK.
- How are you to be paid? When? Where? In what currency? How can you be sure that the right amount is paid? Do you have the right to audit your licensee's accounts? What happens if he or she does not pay you on time?
- What happens if your licensee under-performs? Do you have the right to appoint another licensee or even terminate the licence?
- What happens if your licensee becomes insolvent? Do you really want to be dealing with a liquidator or the licensee's creditors?
- There are bound to be disputes and differences but how are they to be resolved and under which legal system?
On all those matters you will need professional advice not just from lawyers but also accountants and maybe patent or trade mark attorneys. The Institute of Chartered Accountants of England and Wales has a searchable database of their member firms by geography and specialization. So, too, does the Law Society for solicitors, the Institute of Trade Mark Attorneys and the Chartered Institute of Patent Attorneys. You can now access the Bar direct and you can consult the Intellectual Property Bar Association for a barrister specializing in IP. The corresponding association for solicitors is the Intellectual Property Lawyers Association.
As I said in my previous article I am making this information available to the ballet world pro bono as a thank you for all the pleasure dancers, companies, theatres and schools have given me throughout my life. I will answer any questions that anyone has by phone or email. My number is 020 7404 5252 and you can contact me through my contact form, twitter, Linkedin, G+. Facebook or Xing.