Photograph by ANDREW B. MYERS
HOW TO USE
DO IT YOURSELF. The main purpose of an agreement
to license intellectual property is to give entrepreneur-licensees permission to do what they want and
need with that property. The risk is that if you’re not
knowledgeable enough to build appropriate permissions—related to duration and parameters of use,
for example—you’re asking for trouble, says Marc P.
Misthal, an attorney and shareholder at Gottlieb,
Rackman & Reisman, an IP law frm in New York City.
“If you license a photograph to use on your website
and brochure, you cannot legally use it on a promotional backpack,” he says, noting that such usage
assumptions among licensing neophytes are typical.
“You can’t forge a good deal unless you know what
AGENTS. A licensing agent, entrusted by IP owners
to make deals, is one conduit to help your licensing
quest. “These agents know what it takes to secure
an agreement, and they’ll want to see a proposal
from the potential licensee to evaluate,” says Misthal,
adding that redos are not uncommon. Entrepreneurial clients of Jack Morrow’s Out of the Box pay both a
monthly retainer for his expertise in identifying—and
pursuing—suitable licenses and a commission on
royalties for licenses secured. The ROI is that good
licensing agents are more attuned to matters that
afect newbie licensees, such as: Would you even be
deemed a suitable candidate by the IP owner?
IP ATTORNEYS. Because of the specifcity of IP law,
Misthal advises budget-minded, license-seeking
entrepreneurs to negotiate and work out the bulk
of a deal with licensers and agents. “When you’re
nearly ready to sign the license agreement, hire an
intellectual property attorney to review the agreement and tell you what needs to be added and omitted,” he says. Good IP lawyers ensure that contracts
spell out who’s responsible for what, and address
topics such as exclusivity, disputes, and even jurisdiction and venue in case of a lawsuit. Once you know
the issues that need to be fxed, you can again hire
the IP attorney to revise the contract. But many businesses don’t realize they need a written agreement.
One company hired Misthal’s frm after it had used,
without a licensing deal, a photograph lifted from a
website, and the agency representing the photographer sent a bill. “Entrepreneurs like using stuf for
free, and licensers are onto them,” says Misthal.
THE KING OF MERCH
Elvis trinkets may seem ubiquitous, but his
image is tightly controlled by Elvis Presley Enterprises,
which manages IP for the Elvis Presley Trust.
A secure online-payment tool created
and co-owned by CEO Kevin Shamoun,
Zeamster had 10,000 monthly
paying licensees in North America
in 2015 and twice that in 2016.
His Detroit-based frm projects a
60 percent increase this year.
The Vault, part of Stephen Arnold
Music, in Dallas, licenses music like
this Jefrey Woodall electronica track,
to brands and networks. The frm
issued 700 licenses last year, about
30 percent for websites, videos, and
other digital media.
Lucy Ricardo, the title character
of I Love Lucy, working haplessly
in a chocolate factory is just one
of the enduring images from
this 1950s sitcom, which is still
actively licensed by CBS.
director of Suprex Learning, in
Houston, licenses an online
practice-testing software called
Test Innovators. “The license
gives us an edge,” he says. “The
technology assesses academic
weaknesses very quickly and
allows parents to chart progress,
so it’s well worth the cost.”
While you might really want to
license a song by Beyoncé, you
may need to be more realistic in
your approach. Can some less
costly music work as well?
“Entrepreneurs need to accept
that more afordable intellectual
property can still fulfll their
business goals,” says Marsha G.
Ajhar, an intellectual property
attorney at Smith, Gambrell &
Russell, in New York City. “In
fact, if venture capitalists see
you’ve budgeted an unrealisti-
cally large sum on a licensing
deal, they might consider you
too great a risk to fund.”