Confirming who actually owns the rights
Before anyone negotiates royalties, someone should confirm that the licensor holds what it is licensing. Patents and registered trademarks have public records, but those records may lag behind assignments, security interests, or ownership disputes. Copyrights and software are harder. Work created by contractors usually belongs to the contractor unless rights were assigned in writing, since the categories that qualify as work made for hire are narrow, so a company can be licensing code it never fully owned. Trade secrets and know-how have no registry at all. Ask for the chain of title, earlier licenses that may conflict, and any pending claims or challenges. A licensee who finds a gap only after launch usually has far less leverage to fix it.
Scope, control, and improvements
Much of the value of an IP licensing agreement sits in a few definitions: which rights, which products, which territory, and whether the grant is exclusive. Exclusivity raises its own questions, including whether the owner itself can still use the rights and whether exclusivity ends if minimum sales are not reached. Trademark owners need real control over the quality of licensed goods, because a loose license can weaken the mark. Sublicensing, ownership of improvements, and who pays to enforce the rights against infringers are frequent sources of later dispute. Royalty clauses should say clearly what is counted and how audits work.
Planning for the end of the deal
Licenses end through expiration, breach, a change of control, or a party's financial collapse, and each path should be addressed in the agreement. Bankruptcy law gives some licensees protections when a licensor fails, but the details depend on the type of rights involved, so the drafting deserves attention. Sell-off periods for inventory, return of confidential materials, and continuing royalties on products already sold all need clear answers. In a first review we read the draft or term sheet, map the rights against the business plan, and identify which terms should be resolved before signing.
