A licensing agreement is usually a contract between the producer and the consumer of a product, granting the consumer the right to use the product under specific conditions -- but it can also be an agreement between the inventor and a manufacturer to produce and distribute a product. A licensing agreement typically applies to intellectual property, such as computer software or a patented invention. A licensing agreement can also be used to set up the production and distribution of trademarked products or copyrighted art (a mass-produced painting or a specific character such as Donald Duck).
Typical costs:
Look at existing licensing agreements, such as those included with the software programs on your computer. Don't copy them exactly, but use them to get a sense of what needs to be in an agreement. Many websites post free sample agreements[1] , and companies such as LawDepot.com[2] or Nolo Press provide online forms that can be adapted to your needs for $10-$50 or more, depending on the level of service/advice provided.
If you want a licensing agreement tailored to your specific situation, most attorneys charge $100-$300 or more an hour. A simple contract typically takes about 3-4 hours, or $300-$1,200 or more -- which includes an initial draft plus revisions. The more complicated the product or situation, the more time it will take and the more it will cost.
Having an attorney review a licensing agreement proposed by the other party could take an hour or more, or anywhere from $100-$500 and up depending on how much work is involved and the attorney's hourly rate.
A licensing agreement needs to clearly define the scope of the license (so the owner retains the ultimate ownership rights), any money involved (such as a one-time license fee, royalties or monthly payments), the term or length of the agreement, prohibited uses and other details. Lawyers.com provides an overview[3] of licensing agreements.
The Yale Library has compiled information about licensing and maintaining collections of digital information, including a standard licensing agreement[4] and a list of general clauses[5] that appear in licensing agreements.
FindLaw.com provides an overview of licensing an invention[6] .
Additional costs:
If your lawyer negotiates for you, it could take more time and cost more. Remember that your attorney may have to talk with you about what you want, talk with the other party, talk with you again about the other party's proposals, then get back to the other party with your response. A negotiation that might take you about 15 minutes in direct conversation with the other party could take an hour of your attorney's time.
Discounts:
Some people cut costs but still get legal guidance by using a free sample agreement to create a document, then have an attorney review it. This works only if you start with a valid sample contract.
Shopping for a licensing contract:
In business law, attorneys who handle legal disputes are litigators while those who handle contracts, securities and other business matters are transactional lawyers. An Illinois attorney provides tips for selecting[7] a business lawyer.
Licensing agreements come under intellectual property law. Referrals to intellectual property attorneys are available from Lawyers.com[8] and FindLaw.com[9] .
Your attorney should provide you with a written fee agreement; be sure you understand what is or is not included, and all potential costs.
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