Transactions involving intellectual property (IP), such as patents, trademarks, copyrights, trade secrets, and other assets and personal rights subject to IP protections, are often accomplished via license grants. Owners of IP are granted certain exclusive rights to utilize and profit from their assets. However, owners of intellectual property often decide to let others exploit their ideas or works. This might be done to increase their presence in underserved areas or to allow another business to create and promote the licensor’s IP. The licensor, however, engages in a formal licensing agreement with licensees. This is to safeguard the way their intellectual property is utilized and to make sure they are adequately compensated for the use of their property by a third party.
Royalties
In return for using a licensor’s IP, a licensee must pay the licensor in the form of IP royalties. They are often paid regularly (commonly monthly, quarterly, or yearly) as a percentage of the net or gross income generated by intellectual property. There may also be set rates for IP royalties.
IP license types
Typical IP licenses in Latvia include:
Exclusive
In Latvia, an exclusive license gives the licensee the only authority to use the licensed IP in a certain industry, region, or for a predetermined amount of time. The licensor agrees not to grant licenses to any other party, including themselves, during the term of the exclusive license. This type of license provides the highest level of exclusivity and control for the licensee.
Non-exclusive
The freedom to use the licensed IP with other licensees is granted under a non-exclusive license in Latvia. The licensor is still able to provide comparable licenses to other parties. When the licensor wishes to spread out the usage of the IP and increase the possible income by allowing various parties to use it, non-exclusive licenses are often employed.
Sole
In Latvia, a sole license lies in the middle between an exclusive and non-exclusive license. It gives the licensor the freedom to use the IP alone, but they promise not to provide licenses to any other parties. While still enabling the licensor to exercise certain control and use rights, this kind of license gives the licensee a certain amount of exclusivity within a specified area or jurisdiction.
Compulsory
A compulsory license may be issued in Latvia, as in other countries, under certain conditions by the government or a regulatory body. It permits a third party to use the IP without the rights holder’s permission. Typically, compulsory licenses are issued to further the public interest, such as assuring access to necessary medications or fostering competition in certain sectors. Latvian legislation outlines the prerequisites and procedures for acquiring a compulsory license.
Scope and procedures for Latvian IP licensing
Both parties, the licensor, and the licensee, must sign the license in writing and must execute it. The general prerequisites for binding contracts also apply here. To be enforceable against other parties, the license must be recorded at the Latvian Patent Office. IP owners may also inform the Patent Office of offering an open license if they want to allow any interested party to use the IP.
Principal license terms
All licenses for intellectual property rights (IPRs) of any kind must have the following details:
- Accurate information about the IPR that enables its identification.
- Addresses and names of the parties.
- Type of license.
- Duration of the license.
- The geographic area where IPR may be utilized.
- The IPR’s use-form possibilities.
- Range of usage permitted.
The parties may, in their sole discretion, establish other terms in the agreement, such as licensing fees and financial requirements.
Termination
A well-written license agreement should include termination clauses that specify the conditions under which either party may end the contract. A violation of the contract, a failure to pay royalties, or insolvency are common reasons for termination.
Dispute settlement
The licensing agreement should state the preferred form of dispute resolution, such as discussion, mediation, or arbitration, in the case of a disagreement. It’s also advisable to include a choice of law and jurisdiction provision.
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