IPO Owners As Licensors - Opportunities To Enhance Value
Key questions that an IPO owner, as licensor, needs to ask are the following:
1. Is your licensee insured?
2. Is his insurance adequate?
3. Is your company named as an additional insured under his policy?
4. Does your license agreement require his insurance to step up to the plate before your indemnification provisions are triggered?
5. Are indemnification issues covered under patent owner’s policies?
In assessing the answers to each of these questions, it is evident that consideration of insurance is significant not only for the licensor, but assuring that potential licensees have adequate insurance to fulfill their contract obligations is critical. For example, when entering into any form of software licensing agreement where the character of the software in use could create exposure for the company, it is important to know what rights of indemnification against the licensee for making use of a product outside the scope of its intended use within the terms of the contract is of no benefit if there is no recourse as a practical matter. A licensee with no assets is a worthless target. A licensee, however, that has adequate insurance coverage which names the licensor as an additional insured can make a big difference.
1. Is your licensee insured?
2. Is his insurance adequate?
3. Is your company named as an additional insured under his policy?
4. Does your license agreement require his insurance to step up to the plate before your indemnification provisions are triggered?
5. Are indemnification issues covered under patent owner’s policies?
In assessing the answers to each of these questions, it is evident that consideration of insurance is significant not only for the licensor, but assuring that potential licensees have adequate insurance to fulfill their contract obligations is critical. For example, when entering into any form of software licensing agreement where the character of the software in use could create exposure for the company, it is important to know what rights of indemnification against the licensee for making use of a product outside the scope of its intended use within the terms of the contract is of no benefit if there is no recourse as a practical matter. A licensee with no assets is a worthless target. A licensee, however, that has adequate insurance coverage which names the licensor as an additional insured can make a big difference.
