Entrepreneurship, Second Edition

13.8. Licensing and Technology Transfer

Large and small businesses regularly "license out" their intellectual property and also "license in" the intellectual property of others. A license is simply a special form of contract or agreement. Each party promises to do or pay something in return for the other party doing or paying something. Contracts that deal with the transfer of technology or, more broadly, intellectual property—patents, trade secrets, know-how, copyrights, and trademarks—are generally called licenses. The licensed property can be anything from the right to use Mickey Mouse on a tee shirt or make copies of the movie Star Wars, to the right to operate under the McDonald's name, to manufacture or sell a patented product (such as a handheld microprocessor-based product), or to reproduce, use, or sell a piece of software. Software licenses are just one of the many types of licenses. The basic considerations are the same as for any other license, but specific clauses and language are tailored to the software environment.

13.8.1. Common Concerns and Clauses

The term license typically refers to a number of different types of contracts covering intellectual property, including primarily an assignment, an exclusive license, and a nonexclusive license. We'll use this broad reference in this section.

An assignment actually is an outright sale of the property. Title passes from the owner, the assignor, to the buyer, the assignee. A license is more like a rental or lease. The ...