We often discuss the numerous challenges that can arise when businesses want to protect their intellectual property. One common issue is mitigating the threat of infringement by securing trade secrets, patents and copyrights.
But in some cases, the best way to resolve disputes and infringement allegations is to cross-license intellectual property.
What is cross-licensing?
Rather than keeping others from protected information, a cross-licensing agreement grants mutual rights to multiple parties. This arrangement gives two or more parties the right to use each other’s patented property without worrying about lawsuits.
These agreements can be particularly common in industries like transportation, telecommunication and technology. For example, Apple and Microsoft have had cross-licensing agreements since the 1990s. The agreements between the two tech forces have covered design patents, technical software features and more, and at one point covered any patent filed by either company.
If your business is interested in expanding market access and reducing production costs, cross-licensing can be a valuable solution.
Additionally, cross-licensing agreements can effectively resolve litigation claims. This was the case recently when cellular companies Samsung and Ericcson reached a cross-licensing agreement. The decision terminated the multiple complaints and legal claims both parties had filed across the globe.
Crucial mistakes to avoid in these arrangements
If you are considering a cross-licensing agreement, do not overlook the possible drawbacks of these arrangements.
Cannibalizing of sales could occur, which is when sales of an existing product drop because a new or similar product comes on the market. This can be a concern when parties cross-license their IP, and failing to account for this or take steps to prevent it can be a costly mistake.
Another misstep is licensing your core patents. Doing so could lead to you relying on the other business instead of mutually benefitting from cross-licenses.
Maximizing the value of a cross-licensing agreement
Strategically cross-licensing patents can help parties remain competitive without the disruptions presented by infringement claims.
However, to ensure these arrangements deliver as much value as possible, business owners would be wise to proceed with caution. Consider what you will share carefully. And have an experienced legal professional review a contract before signing.
Cross-licensing has numerous benefits. When you avoid common missteps, you can position your company to get as much value out of this type of arrangement as possible.