What is a Licensing Agreement Negotiation?
A licensing agreement is a legal contract in which one party gives the other permission to use, sell, or produce their intellectual property. It is an important agreement to draft clearly because it outlines important aspects of their working relationship, such as what intellectual property is included, what compensation or royalties will be paid for using the work, and more.
If you’ve received a licensing agreement but you’d like to change some of its terms, you can negotiate with the other party. Read the rest of this article to learn how to navigate the process and how a lawyer can help you achieve better contract terms.
What Can You Negotiate in a Licensing Agreement?
You can negotiate many terms in a licensing agreement. Some of the most commonly-negotiated ones include the following:
- Pricing and fees. This section of the licensing agreement will explain all royalties, compensation, and any included fees.
- Scope of rights. The agreement needs to specify if the contract is exclusive or non-exclusive, as well as what uses are allowed.
- Term duration. How long the agreement lasts and how it can be renewed needs to be clarified.
- Modifications. If there are changes made to the work, the contract must define who will own the rights.
- Standards. To maintain quality, the licensor might wish to have the right to conduct audits. If so, the contract will have to explain how this will happen and at what milestones.
How Should You Negotiate a Licensing Agreement?
To make discussions with the other party effective, there are some tips to consider.
Review the Licensing Agreement
Prior to entering into negotiations, you need to review the licensing agreement. Read all terms and clauses closely. As you read, make notes so that you can identify any confusing parts or areas where you’d like to negotiate.
It’s worth considering hiring a lawyer to review your contract. They will use their experience and skill to identify problematic areas and help you consider what areas to challenge or discuss.
To get a legal review of your licensing agreement, you can go to the ContractsCounsel marketplace. Post your project for free. Lawyers who are interested in the job will send you multiple bids. Review the lawyers’ profiles according to criteria such as their experience, location, and client ratings for previous projects completed on the platform.
Open the Discussion
Although you might think you should inform the other party about the terms you want right at the start, such as a revised price, this can backfire, even if you’re asked to provide your preferred term. You want to come across as reasonable, so rather tell them that you’d like to settle on a fair and reasonable amount. This serves to slowly open negotiations.
When it comes to pricing, it helps to have a pricing range you’ve already calculated in mind so that you can better meet the other party’s requirements. If you throw out a high number from the start of negotiations, this could result in a dead-end or pushback from the other party.
Find Alternatives and Benefits
You might not get what you want, such as a higher or lower price, but this shouldn’t result in the end of discussions. Find alternatives. It helps to prepare this before the negotiations, such as by thinking about your main priorities during negotiations. If one fails, you can go to the next one on your list.
For example, if you’re a licensor who doesn’t want to lower the licensing price, you could focus on ensuring exclusivity. This, in turn, usually commands a higher price while giving the licensee the chance to be the sole receiver of the content.
Clarify Confusing Terms
It’s important to bring any confusing or vague terms to the negotiating table. Ask for clarification so you know what you’re agreeing to beforehand. This will help you clear up wording such as “reasonable efforts,” which are open to different interpretations.
Once you have clarity from the other party about those terms, you can find ways to rephrase them so that they meet both your standards.
Should You Hire a Lawyer for a Licensing Agreement Negotiation?
Although it’s not always necessary to hire a lawyer for help with licensing agreements, it’s a good idea to get your contract legally reviewed before you enter into negotiations with the other party.
If you do want to work with a lawyer to help you with negotiations, good timing is key. Sometimes, having a lawyer involved in the process can make the other party feel like you’re being defensive or coming on too strongly, unless you’ve both decided to have legal representation. If not, it might be best to handle all basic, straightforward contract negotiations yourself before including a lawyer.
Hiring a lawyer can help you in the following ways during licensing agreement negotiations.
- A lawyer will help you spot risks in the licensing agreement. This is crucial to flag before you sign it. Examples of risks include unclear or vague wording and highly restrictive clauses.
- They’ll remind you of your rights. This includes your rights regarding contract termination, permitted uses of the content, and others. This will help you to better bargain and negotiate with the other party.
- They’ll structure payments, royalties, and fees. This protects you financially while being fair and reasonable, according to market rates.
- They’ll review or redraft your contract. Legal assistance via these tasks will keep the licensing agreement clear, legally enforceable, and fair to both parties.
- They’ll use their experience to negotiate on your behalf. They’ll uncover the other party’s motivations to help you strengthen your position.
- They’ll plan your negotiation alternatives beforehand. This prevents dead-ends during the discussions.
- They’ll document all changes to the agreement. This enforces accountability and prevents misunderstandings during the contract term.
Where Can You Find a Lawyer for a Licensing Agreement Negotiation?
Although a lawyer can help you negotiate for better terms in a licensing agreement, you might not always know of one to contact. To make it easier for you to hire a qualified, professional lawyer, you should visit ContractsCounsel. All lawyers on the platform are vetted, and they have the experience and credentials to help you navigate license agreement negotiations with ease.
Select a lawyer by reviewing their profiles. ContractsCounsel provides extensive data about lawyers on their platform, making the process of securing a lawyer much smoother and stress-free.
