Maintaining control of your licensees is challenging, especially if you have a few of them. If you don’t keep up control, you can wind up losing control of your IP.
Don’t let this happen to you. You’ve signed a licensing deal, given your partner all your IP assets and it’s been months since you heard from them. When you do finally speak to them, you find out they haven’t done anything with your IP. Months go by, and they keep promising they’re working on it. Or worse, you haven’t heard from your licensing partner, and when you finally speak to them, you learn they’ve been selling your licensed products or technology, but didn’t bother to let you know.
Maintaining control of your IP is the core of licensing. You’re allowing someone else to use your IP, and in return pay you a percentage of their sales. You’ve got to make sure your licensing partner is clear on what’s required of them and what rules they must follow in getting your IP into the market.
A good example is when I worked at the studios. The agreements had several different control benchmarks. One was a specific date by which the licensee had to get the products to market. Another was a very rigid product approval process, that required the licensees to send their use of the characters or brands at several stages – such as the concept, product design and a pre-production sample. They weren’t allowed to move to the next development stage until they got written approval. A third control required the licensees to report sales on a quarterly basis, and pay any royalties owed. If the licensees didn’t follow this control requirements, they risked losing the license.
Keeping control of how your licensee uses your IP is often overlooked. Yet it’s one of the most important. If your IP is a brand or trademark, using a style guide with pre-approved graphics is one of the best ways to make sure your IP is consistent on all types of products. If your IP is a professional service or training know-how, you’ll want to control the materials used to deliver your IP. I’m working with a client who’s licensing their consulting training services. To maintain control, we set up a system requiring the licensee to get all their training materials directly from my client. He controls any customization to make sure their know-how and copyrighted material stays intact. Another way of doing this is to set up a website where all materials are stored, downloaded and tracked.
Controlling your licensing partners is more than just an occasional phone call. Licensing is about controlling your IP rights, and part of that controls means making sure that your licensees are doing what they agreed to do. If you’re actively involved in licensing your IP to many licensees, be sure your licensing partners are clear on your control benchmarks, including dates, submissions and reporting rules. If not, your IP could wind up in limbo because your licensees don’t do anything, use your IP incorrectly, or worse, end up losing rights to your IP.