How to Buy Licensing Rights: Everything You Need to Know
To understand how to buy licensing rights, you need first to understand what product licenses are.3 min read
Updated November 2, 2020:
To understand how to buy licensing rights, you need first to understand what product licenses are. Product licenses protect the seller's rights to sell their products and make a profit. These rights help to encourage innovation, invention, and the free market.
What Are Licensed Products?
Licensed products are different from promotional materials. People will pay for a licensed product; they aren't given away for free. Licensed products should target a particular demographic. If you target the right audience, they will pay top dollar for what you're selling. A product license can tie your product to a certain demographic.
Some licenses are tied to certain TV shows, sports teams, or brands, which will then tie the products with those licenses to the demographics targeted by those things. Licenses for unknown products are not very valuable when it comes to marketing.
There are different types of licenses, some of the most common are:
- Voluntary licenses
- Compulsory licenses
- Exclusive licenses
- Non-exclusive licenses
- Blanket licenses
Advantages of Licensing
There are many reasons to license a product. Licensors benefit from granting a buyer a license to their product. They are able to eliminate the costs of marketing and manufacturing that can come with the launching process for a new product. The royalties gained from a product license translate into profits for the licensor, so it's a huge win for them. Taking full advantage of a licensing right can lead to added success for your company.
How to Obtain a Product License
You can purchase a product, or you can purchase the license or copyrights for a product. These are very different processes which provide you with very different rights. Purchasing a product outright gives you ownership of that one product, but doesn't necessarily give you the right to recreate it or profit from it.
The first part of the process when obtaining a product license is finding the copyright holder or the rights holder. This is the individual or company that owns the rights to a particular product. Depending on your plans for production and use, you may or may not require a license. Sometimes, it can be helpful to ask an experienced lawyer whether you'll need a license. You don't want to go to the trouble of buying licensing rights if you don't need them, but you also don't want to get in trouble for not having them when you should.
Most of the time, the owner of the copyright or product license can determine their own licensing fee. They can usually choose to refuse to sell a license to any buyer. These are called voluntary licenses. Sometimes you'll come across compulsory licenses or statutory licenses. These are types of licenses with set fees that are available to anyone who wants to make the purchase.
When you get in touch with a licensing agent, they'll help you determine exactly what kinds of rights you need. It's ideal to have everything figured out before contacting the rights holder for the license. This way, you can hopefully eliminate the need to go back for more licensing later.
Exclusive Versus Non-Exclusive Licenses
Exclusive license rights give rights to the buyer and no one else. A licensor of an exclusive license can only provide license rights to one buyer at a time. For instance, when a film production company buys the rights to a book in order to adapt it into a movie, they usually purchase exclusive rights. That production company doesn't want another company making the same movie at the same time.
Movie theaters purchase licenses to show movies and profit from their showings. However, they don't purchase exclusive licenses. Non-exclusive licenses may be granted to multiple companies or individuals at a time. Within a certain area, five different movie theaters can show the same movie, because they have all purchased non-exclusive licenses.
Additional Elements to Buying Licensing Rights
Once you know what you need from the rights holder, make sure you've identified the correct person or company. Sometimes a copyright holder will have a person who handles the licensing process for them. Then, you'll need to send your request for licensing. Usually, this will be done via email or through an online process.
If you need the license by a certain time, you can include a response deadline in your request. The process for buying licensing rights can take a while, so be sure to give yourself enough time.
If you need help with understanding how to buy licensing agreements, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.