A licensing agreement in Florida is created when one party wants to allow another party to use his product or idea in exchange for an agreed upon amount of compensation. Licensing agreements in Florida are common transactions, but it is also common for problems to arise with such agreements. Some of the most common problems include:
Failure to Adequately Define the Product or Service
The product or service may be defined too vaguely or broadly, which may potentially provide one of the parties with more rights than the parties actually believed they were exchanging. The definition of the product or service is critical in any license agreement and is the cornerstone of the agreement. A poorly drafted definition can affect a number of other provisions in the contract, including the scope of exclusivity and the licensor’s ability to enter into similar agreements with another licensee.
Improper Scope of Exclusivity
It is common in licensing agreements to prohibit a similar agreement being made with a competitor. Likewise, problems may arise if one party believes that it has the right to use the product or service for multiple events or locations and the other party disagrees. The scope of exclusivity may be ambiguous, giving a different meaning according to each party’s perception. It is critical that both parties have a clear understanding of the rights that are being exchanged.
Breach of Terms
Another issue that may arise in a licensing agreement is how a breach or default is defined. Some companies may use the same language for every licensing agreement into which they enter. However, this can be problematic if a special circumstance arises in which a party may act in a manner that was not originally contemplated. Additionally, the terms regarding how to terminate the agreement should also be clearly defined.
In order to avoid these common problems in licensing agreements, it is important to have a licensing agreement drafted or reviewed by an attorney who can ensure that the proper terms are included in a clear manner.