Attire Accessories - May/Jun 2018 (Issue 70)

10 TOPTIPSWHENTHINKING ABOUT A LICENSE/ROYALTY RELATIONSHIP: 1. THEY’RE MY DESIGNS! Assigning the rights in your designs effectively hands all the control over in those designs and the manner in which they can be exploited by the recipient, unless you agree specific terms under which you keep the right to maintain control over certain matters. 2.WHAT LICENCE? If you do wish to retain more control over your designs, then you should license them rather than assign them.This means that you retain ownership of the rights and grant others the right to use the designs subject to certain restrictions, which you can impose. An exclusive licence means that you cannot use the designs for the duration of the licence – that becomes the exclusive right of the person granted the licence. A sole licence means that both you and the person granted the licence can use the designs. A person who is granted a non-exclusive licence merely has the right to use the designs but cannot take action to prevent anyone else also using them. Someone granted an exclusive licence can take action to stop anyone else using the designs. 3. MAKE A LIST All the designs that are to be covered by the licence should be listed in a schedule attached to the agreement.This avoids any doubt as to which designs are covered. If the licence covers future designs then further schedules should be added when those designs are created. 4 COPYING – WHO PAYS THE BILLS? The licence should state whose responsibil- ity it will be to take action against someone found copying the designs. Sometimes the cost of this can be shared, as can the proceeds recovered from the copier, but the licence should state how they will be shared. 5. HIDDEN EXTRAS The licence should set out exactly how royalties will be calculated.There will be a big difference between royalties calculated as a percentage of the retail selling price of the article as opposed to its wholesale price. Check for further deductions for things such as discounts on bulk orders. 6.WHICH COUNTRY? It is possible to license different companies to sell the same design in different countries or other geographical areas.The licence should clearly state which country or countries it covers, and should prevent active sales of the designs outside of that territory. It is also important that the licence states which country’s law will apply to the licence. 7. HOWMUCH? It is possible to agree either a one-off lump sum, or payment of regular royalties on sales, or a combination of the two, often in the form of an upfront payment followed by royalties. If you do agree an upfront payment and royalties, check to see whether the lump sum payment is deducted from future royalties. Also consider using a minimum guarantee for royalties, so that you are paid a guaranteed minimum amount each year even if the royalties actually earned are less than that amount. 8. HOWLONG? This can often be an important but difficult issue, as the shelf life of the design is often not known at the outset. It may be difficult to get a company to agree to continue paying royalties after the period of copyright or design right protection has expired. 9. THE LASTWORD... If you want to ensure that the products are being made to your correct design, or to your standards, then include a right to inspect samples before they are put into production. Similarly, you can include clauses that state the manner in which the products will be promoted. You may want to ask for your name to be included on all publicity materials. 10. REMEMBER...! You should always read the whole of the licence and seek advice if you are unsure of the effect of any of the terms. A ACID ACID CASE STUDY We asked an ACID member, a user of ACID’s industry standard License Royalty Agreement, to underpin all her licensing relationships, to list her top tips when negotiating a license royalty deal: • Make sure that the company you deal with commits to sales for a period of at least three years and that there is a clause included enabling you to accurately audit their accounts. • Ensure that your Royalty Payments in the Agreement are in monetary terms rather than percentage terms. • Ensure you have an intellectual property lawyer specialist to include additional clauses in the standard license royalty that are pertinent to your particular needs. ACID CASE STUDY ACID recently spoke to a member who had purchased a confidentiality agreement. She commented, “We’d been working with someone who had been fantastic when we started up the business, but we got our fingers burnt when we felt he may have taken some of our ‘know how’ and our ideas and there was nothing we could do about it. We have now just employed our first member of staff and have ensured that, as part of our standard terms and conditions of employment, there is a signed confidentiality agreement.This gives us assurance that should things go wrong we can rely on the small print.There are so many ‘hats’ that a small business owner has to wear and sometimes it’s easy to forget something that really matters.” ATTIRE 103 ACID