The success or failure of a sale, purchase, license or franchise of an intellectual property right relies in having an effective assessment of the intangible asset and follow the recommendations and assess the possible risks when acquiring the intellectual property right, only this way, corporations can positively guaranty an investment.
It is important for the parties to have an economic assessment of the intellectual property right to be negotiated, and that such right is registered in the accounting books in a proper way. For this, it is recommended that a specialist in such matter and the accountant of the company work side by side to have a real assessment and not just an assessment subjectively fixed by the seller or the licensor.
Important aspects that should be considered when negotiating an intellectual property right are:
- Verify that the seller of the intellectual property right to be negotiated is the owner of the right, this is, making sure that the seller has indeed the right to sell the intellectual property.
- Verify the validity of the intellectual property right, taking into consideration that only trademarks are renewable every ten years, and other types of industrial property rights are not renewable, such as patents, which are protected for 20 years, utility models and industrial designs, which are protected for 10 years, 18 years for vegetative if they are vineries and forest trees, fruits and ornamentals, and 15 years for other types of vegetative. Once this protection period expires, they will become of public domain, therefore, the right of the owner to exclusively exploit the intellectual property expires.
- Investigate if there is any seizure, mortgage or other type of encumbrance over the intellectual property right.
- Investigate if there are any current legal or administrative procedures which may affect the intellectual property right negotiated.
- Analyze possible risks regarding the intellectual property right of third parties, to avoid a lawsuit in the future.
- For transfer of copyrights, it is recommended to analyze if the transfer will include all the ownership rights (right to reproduction, communication to the public, distribution to the public, importation of copies, adaptation translation) which are of exclusive use of the owner and therefore, they may remain with the owner.
- For licenses to use trademarks, it is recommended to analyze the period for which the license is being negotiated and the obligations that the parties must compel, as well as the delamination of the territory in which the use and commercialization of the brand is authorized.
- Consult with the transferor or licensor of the intellectual property right about other intellectual property rights that may affect the use of the intellectual property right being negotiated, for example, if there are any copyrights for any manuals, guidelines or pamphlets.
- To know exactly what is being purchased or sold and the obligations the parties are compelling to abide by.
- To be aware of the costs of maintaining the intellectual property rights, such as patent maintenance fees, renovation of the trademarks and custody and supervision of the trademarks.
The intellectual property rights are very important assets for corporations, reason why, when purchasing, selling, or transferring a license or franchise of intellectual property rights, one must act diligently so that the seller, as well as the purchaser, licensor or licensee, accordingly, reach a successful negotiation in which both parties are benefited.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.