A licensing agreement doesn’t eliminate IP violation risk

On Behalf of | Jul 5, 2024 | Business Litigation

Intellectual property can help a business compete with other major players in the same industry. Patents allow businesses to improve upon existing processes and products. Copyrighted creations can be sources of revenue or important for company branding.

Many businesses go to great lengths to protect intellectual property (IP) from infringement. Registration of valuable IP holdings with federal authorities is a popular step. Some organizations also need to take legal action when they uncover signs of infringement by competitors or individuals. Organizations with valuable intellectual property sometimes negotiate licensing agreements to protect their holdings. However, licensing agreements do not automatically prevent infringement.

How licensing agreements can help

When there is an outside party that has an interest in using a company’s intellectual property, licensing agreements give them access to those concepts or creative works. A licensing agreement usually persists for a set amount of time and allows an outside party to use the intellectual property of another person or business in certain circumstances. Many companies negotiate licensing agreements with competitors as a way of preventing them from violating IP rights. Unfortunately, simply having a contract in place does not ensure the other party complies with the agreement. Infringement is still possible when there is a licensing agreement in place.

How companies may violate IP licensing agreements

There are many ways for an organization with a licensing agreement to violate the terms of that contract. Perhaps one company continues to use the licensed concepts secured from another business after the agreement ends. Maybe they exceed the agreed-upon limit for the number of products the company can produce or how many times it can sample a copyrighted original work. Violations might even include technical issues such as using licensed creative works or concepts for purposes outside of the original agreement.

How do companies resolve licensing agreement violations?

In some cases, the simplest solution to a licensing agreement violation is to renew or renegotiate the original agreement. The company that infringed on the intellectual property rights may owe the other party penalties in some cases. Other times, simply communicating about the infringement could be enough to prompt the other party to cease certain activities. In case is where the infringement doesn’t end and a new agreement is not immediately forthcoming, it may be necessary to take the matter to court. Judges can potentially enforce existing agreements, invalidate contracts and award damages to a party harmed by the misconduct of another business.

Initiating contract litigation is sometimes the best way of resolving intellectual property violations. Organizations with valuable intellectual property often need to be proactive about protecting it.