• Indemnification and insurance. The licensee should ask for a provision indemnifying them against copyright, trademark and other infringement claims that may arise out of use of the licensor's intellectual property. If the licensor gives permission to use a trademark the licensor contends it owns, and it turns out that someone else believes they own the trademark, you can be sued for trademark infringement. If that happens, the licensee should be indemnified by the licensor so that the licensor is responsible for attorney fees and any potential judgment.
Similarly, both licensor and licensee should have adequate insurance coverage in place to cover claims for product liability or other issues.
A licensing deal can be highly profitable for licensees and licensors, but there are many potential pitfalls that can affect profitability and liability. Before you embark on a licensing deal, be sure to have a thorough license agreement in place.
About the Author:
Lisa A. Lori, Esq., is a partner in the litigation department at Klehr, Harrison, Harvey, Branzburg, LLP in Philadelphia. Lori is a trial lawyer and business advisor, who represents clients in corporate disputes, intellectual property, employment and fraud-related litigation and investigations. She represents clients throughout all aspects of the litigation process—from pre-litigation counseling and settlement negotiations, to trials and appeals. Lori also counsels clients on FTC and FDA regulatory compliance. To contact Lori, call (215) 620-4370 or email firstname.lastname@example.org.