Entertainment Licensing & Branding Blog

With every Licensing Agreement there should be attached a one page summary of the agreement that highlights the Property being licensed and what the most significant conditions and terms are.  Here is the Schedule ‘A’ used in the Licensing Agreement between my corporation and the American Automobile Association, which allowed the usage of the AAA logo on my educational board game titled - THE FRIENDLY FREEWAY.

SCHEDULE A

PROPERTY:  AMERICAN AUTOMOBILE ASSOCIATION Name, Motif and Logo as described in diagram section of this Schedule.

Here was the diagram of the three A’s within an oval circle with the words American Automobile Association underneath it.

LICENSEE PRODUCT DESCRIPTION:  Educational Board game titled:

“THE FRIENDLY FREEWAY”  including and/or all components, designs, characters, and reference materials including with this game design, Copyrights and Trademarks.

TERRITORIES:  WORLD WIDE.

INITIAL TERM:  Three (3) Years From _____ to _____.

TERM OPTION:  As per this Contractual Agreement.

ROYALTY PERCENTAGE:   7.5 % from Net Wholesale Price or 75 cents  whichever is greater.

SPECIAL PROVISIONS:  Refer to this Contractual Agreement.

LICENSOR and LICENSEE can also sign the bottom of Schedule ‘A’.  That way any one can see that the parameters of the entire understanding between the two parties is outlined on one page and agreed to because both signatories have signed the Schedule A as well as the actual Licensing Agreement.

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Schedule ‘A’ is an important attachment to the actual Licensing Agreement since it visualizes and describes the Property that is going to be licensed.  Most Trademarks are diagrams and need to be shown to get a good representation of what they look like and to ensure there is no misunderstanding between the two parties on what is really being licensed.

The Licensee Product description is important to clarify what exactly will be allowed to use the Property on.  Put every version of the product(s) that will be utilizing the Property, including all any and all advertising and marketing materials.

Some contracts allow for World Wide usage of the Property, where others will allow only one country or a group of nations.  Make this as clear as possible by naming every nation if you do not have World Wide usage.  This will ensure there are no misunderstandings on where the Property can be used.

The Term can be for any time period agreed by both parties.  I recommend that you put a clear date from and to, with possible extensions if any are allowed.  Ask for no less than three years.

Royalty amounts can vary from contract to contract and here is where the skill of a good Licensing Specialist can help secure a deal but also a great royalty price.  This negotiation stage is the most important and my expertise is in this area.  Several times I have been able to secure a better royalty rate and/or contract conditions than the lawyers representing both parties, all because of my previous licensing negotiation experience and skilled win-win-win techniques that legal counsels do not specialize in.

In this Licensing Agreement I believed it was in our interest to have a percentage based royalty (7.5 %) because the Canadian currency was rising, yet the American Automobile Association desired a fixed royalty rate of seventy-five ($.75) cents to ensure a minimum fee per product sold.  That is why there is both a percentage royalty rate and a minimum fee royalty rate.

Any Special Provisions or Additional important facts can also be included.

Having both Parties sign the bottom of the Schedule ‘A’ allows for only this one page summary to be shown to third parties, instead of the entire Licensing Agreement (to prove there is an agreement for the usage of the Property).  It also helps make it look more official.

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For the beginning of this series of posts, start at the first one dated Sept 14, 2009 (scroll down).

As most of you know, I am not a lawyer or an accountant and I recommend everyone seek their own legal counsel, accounting and tax advice in all contractual matters.

I provide consulting services and more details are on the ’services’ page of this website.

I hope this contract breakdown helps you understand the intricacies of a Licensing Agreement. Should you have any questions contact me at info@Playdigm.com - please put ‘Your name’ & the word ‘Licensing’ in the subject line of your email.

Thank you.

Sandford Tuey

Well this clause concludes the Licensing Agreement that was signed between my company and the American Automobile Association that allowed the usage of the AAA logo on a game that I invented.  THE FRIENDLY FREEWAY helps teach children how to read a map, legend, left & right, North-South-East-West, and basic sign comprehension.

The next post will be explaining ‘Schedule A’ of the Licensing Agreement which is a one page overview attached to the contract.  For the beginning of this series of posts, start at the first one dated Sept 14, 2009 (scroll down).

This is the next clause in a Licensing contract:

19.  NOTICE and EXECUTION

19. Any Notice or other communication provided for herein or given hereunder to a party shall be in writing and shall be delivered by registered mail or in person to the parties at the addresses set out below:

(a)  to the Licensor at :

“The Licensor’s address.”

ATTENTION: Contact name.

(b) to the Licensee at :

“The Licensee’s address.”

ATTENTION: Sandford Tuey

or such other address with respect to a party as such party shall notify the other in writing as above provided. All notices shall be deemed made upon actual notification or mailing as provided for above, whichever shall occur earlier; provided, however, that notice by mailing shall not be deemed to have been made until delivered.

IN WITNESS WHEREOF the parties hereto have executed this agreement as of the day, month and year first above written.

The Corporate Seal of the Licensor.

______________________________

Authorized Signatory

The Corporate Seal of the Licensee

______________________________

Authorized Signatory

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The Notice portion of a Licensing Agreement just ensures that both parties have the correct contact information for each.  It also details the legal methods of contact, in this case - registered mail or by handing a document to the other party.  Note that it is the date the document is actually received that is the correct and legal date of receipt.

It is common now to allow email or fax as a legal method of contact but any method needs to be described in this section to be approved.

Only the proper signatory can sign or endorse a contract on behalf of each party.  Usually this person is identified by name and I recommend to always ensure that the person’s name is printed underneath the signature plus a detail explaining what position this person has with the company (if a corporation is involved).  This makes it easy for all involved to know who are signing the contract.  The days of company seals being needed to endorse a contract are pretty much over so don’t concern yourself with that.

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As most of you know, I am not a lawyer or an accountant and I recommend everyone seek their own legal counsel, accounting and tax advice in all contractual matters.

I provide consulting which is detailed on the ’services’ page of this website.

I hope this contract breakdown helps you understand the intricacies of a Licensing Agreement. Should you have any questions contact me at info@Playdigm.com - please put ‘Your name & Licensing’ in the subject line of your email.

Thank you.

Sandford Tuey

For the next few posts I will be breaking down a general Licensing Agreement clause-by-clause and giving brief explanations on what it all means. For the beginning of this series of posts, start at the first one dated Sept 14, 2009 (scroll down).

This is the next clause in a Licensing contract:

18.  INTEGRATION

18.1  This Agreement represents the entire understanding between the parties hereto with respect to the subject matter hereof and this Agreement supersedes all previous representations, understandings or agreements, oral or written, between the parties with respect to the subject matter hereof and cannot be modified except by a written instrument signed by the parties hereto.

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Basically  this clause outlines that what is written within this Agreement is the whole oral and written understanding and complete representation between both parties.   If there are any further changes, additions or agreements, they have to be in writing and signed by both parties.

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As most of you know, I am not a lawyer or an accountant and I recommend everyone seek their own legal counsel, accounting and tax advice in all contractual matters.

I provide consulting which is detailed on the ’services’ page of this website.

Hope this contract breakdown helps you understand the intricacies of a Licensing Agreement. Should you have any questions contact me at info@Playdigm.com - please put ‘Your name & Licensing’ in the subject line of your email.

Thank you.

Sandford Tuey

For the next few posts I will be breaking down a general Licensing Agreement clause-by-clause and giving brief explanations on what it all means. For the beginning of this series of posts, start at the first one dated Sept 14, 2009 (scroll down).

This is the next clause in a Licensing contract:

17.   SEVERABILITY

17.1  In the event that any term or provision of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term or provision and this Agreement shall be interpreted and construed as if such term or provision, to the extent the same shall have been held to be invalid, illegal or unenforceable, had never been contained herein.

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The clause clarifies that if a term or provision (any part of the Agreement) is deemed illegal, invalid or unenforceable or is required to be removed for some reason, the contract remains in affect as if the term or provision was not in the contract ever.  This usually allows Agreements to stand and remain valid if a portion is tossed out by a court of law.

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As most of you know, I am not a lawyer or an accountant and I recommend everyone seek their own legal counsel, accounting and tax advice in all contractual matters.

I provide consulting which is detailed on the ’services’ page of this website.

Hope this contract breakdown helps you understand the intricacies of a Licensing Agreement. Should you have any questions contact me at info@Playdigm.com - please put ‘Your name & Licensing’ in the subject line of your email.

Thank you.

Sandford Tuey

For the next few posts I will be breaking down a general Licensing Agreement clause-by-clause and giving brief explanations on what it all means. For the beginning of this series of posts, start at the first one dated Sept 14, 2009 (scroll down).

This is the next clause in a Licensing contract:

16.   CAPTIONS

16.  The Captions used in connection with the paragraphs and subparagraph sections are inserted only for purpose of reference.  Such Captions shall not be deemed to govern, limit, modify or in any other manner affect the scope, meaning or intent of the provisions of this Agreement or any part thereof nor shall such Captions otherwise be given any legal affect.

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This clause ensures that both parties understand that the headers or Captions of each contract clause, in no way has anything to do with the actual text of the Agreement.  The Captions are only to make it easier to locate certain parts of the contract.

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As most of you know, I am not a lawyer or an accountant and I recommend everyone seek their own legal counsel, accounting and tax advice in all contractual matters.

I provide consulting which is detailed on the ’services’ page of this website.

Hope this contract breakdown helps you understand the intricacies of a Licensing Agreement. Should you have any questions contact me at info@Playdigm.com - please put ‘Your name & Licensing’ in the subject line of your email.

Thank you.

Sandford Tuey

For the next few posts I will be breaking down a general Licensing Agreement clause-by-clause and giving brief explanations on what it all means. For the beginning of this series of posts, start at the first one dated Sept 14, 2009 (scroll down).

This is the next clause in a Licensing contract:

15. APPLICABLE LAW AND DISPUTES

15.1 This Agreement shall be governed by the laws of the State of Florida and that any claims or disputes between the parties shall be resolved by arbitration in Orlando, Florida.

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This clause describes where any legal proceedings and disputes will take place and is usually in the district or territory where the Licensor resides. Note that the laws of the United States of America and specifically the state of Florida prevails over the Canadian and Provincial law of British Columbia where the Licensee resided.

Since the Licensee is the one that wants something from the Licensor, the Licensor usually requires any legal matters or disputes take place near them so it limits the Licensor’s future possible legal cost.

Another point to notice is that Arbitration is to be the first way to resolve any disputes or legal proceedings. If the arbitration does not resolve the matter where both parties are satisfied, then nothing stops either party from taking this further in a court of law.  The outcome of the Arbitration may affect the judge’s decision if this matter makes it through to a court decision or appeal.

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As most of you know, I am not a lawyer or an accountant and I recommend everyone seek their own legal counsel, accounting and tax advice in all contractual matters.

I provide consulting which is detailed on the ’services’ page of this website.

Hope this contract breakdown helps you understand the intricacies of a Licensing Agreement. Should you have any questions contact me at info@Playdigm.com - please put ‘Your name & Licensing’ in the subject line of your email.

Thank you.

Sandford Tuey

For the next few posts I will be breaking down a general Licensing Agreement clause-by-clause and giving brief explanations on what it all means. For the beginning of this series of posts, start at the first one dated Sept 14, 2009 (scroll down).

This is the next clause in a Licensing contract:

11. PURCHASE PRICE

11.1 The Licensor agrees to purchase the Licensed Product from the Licensee for the amount of ten dollars ($10.00) U.S. for the sale to their (Licensor name) members. Their sales price to their members shall be for what ever price they desire. The Licensor’s minimum purchase shall be limited to one case/carton. One case or carton of games shall not be more than twelve (12) units.

11.2 Payment times and policy by Licensor from Licensee shall be detailed in a separate agreement letter and agreed upon in writing by both parties.

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Clause 11.1 explains that the Licensor can buy the Licensed Product the Licensee is manufacturing for ten dollars American and that they can sell the product for what ever price they decide. It also details that the Licensor can not purchase less than one case of games( in this contract the Licensed Products) at a time and that there shall not be more than twelve Licensed Products in a case. Total price for twelve would be $120 U.S.).

11.2 states that details regarding payment for such Licensed Products shall be expressed in a separate agreement that requires both parties to sign.

In Agreements that I have negotiated since this one was created and signed, I have now added a clause 11.3 that ensures that the Licensor must pay for the shipping and handling costs for processing all orders to them. The production price was estimated to be $6.40 Cdn, with a handling fee of $2.50 Cdn, so there was to be a good profit margin on this secondary market as the Licensor was not to be the main industry the Licensed Products were going to be sold into. Shipping is now defined as needing to be arranged by the Licensor and all costs shall be their responsibility.

At the time, the Licensor was the American Automobile Association who not only had around 50 million members, they also could sell Licensed Products utilizing their triple A logo but would also sell the Licensed Product to their members by direct mail and through their hundreds of stores. it was a win-win situation, because the Licensee’s main sales were into the Toy and Game industry which promoted both companies to the children who are the future drivers of the world.

I also now add another clause 11.4 that defines that the Licensee can sell the Licensed Product for any price they want.

Next - Licensing Agreement #14 TERMINATION

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As most of you know, I am not a lawyer or an accountant and I recommend everyone seek their own legal counsel, accounting and tax advice in all contractual matters.

I provide consulting which is detailed on the ’services’ page of this website.

Hope this contract breakdown helps you understand the intricacies of a Licensing Agreement. Should you have any questions contact me at info@Playdigm.com - please put ‘Your name & Licensing’ in the subject line of your email.

Thank you.

Sandford Tuey

For the next few posts I will be breaking down a general Licensing Agreement clause-by-clause and giving brief explanations on what it all means. For the beginning of this series of posts, start at the first one dated Sept 14, 2009 (scroll down).

This is the next clause in a Licensing contract:

10. PREMIUMS, PROMOTIONS AND SECONDS

10.1 The Licensee shall have and retain the sole and exclusive right to utilize or license third parties to utilize any of the Licensed Products in connection with any premium, giveaway, in-theater sales, promotional arrangement or fan club (collectively referred to as “Promotional Products”). The Licensee shall still pay the royalty percentage to the Licensor for these products.

10.2 The Licensor shall be able to sell, promote or advertise the Licensed Product to their (Licensor name) membership and may utilize any of the Licensed Products in connection with any premium giveaway, sales, promotional arrangement or fan club (collectively referred to as “Promotional Prdoucts:”). The Licensor shall still pay for these games at the agreed upon price stated in Section 11 or an agreed upon price made in writing and signed by both parties.

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Technically, this first clause outlines that the Licensor allows the Licensee to license to other companies, the products they make that use the Licensor’s Property for sales, premiums (could almost be any type of discount, marketing tactic, loss leader, or variation thereof), give away (usually to media and potential buyers or celebrities for endorsement/testimonial and friends/family and shareholders), in-theater sales (there was talk of a movie or television show at the time), and other promotional arrangement (which could be almost any other way to market the Licensed Products). Of course the Licensee is expected to pay to the Licensor an agreed upon royalty for all of these.

10.2 Lets the Licensor also sell, promote or advertise the Licensed Products to their membership (which at the time was around 50 million people). They would also be able to sell, promote, giveaway, or use as premiums to their members or customers in pretty much any way they liked. Since this Licensor also has outlets throughtout North America and Associated branches throughout the world, it made sense to allow them to sell and market the Licensee’s products. This deal helps both the Licensor and the Licensee make money and cross promote their identities, which is a great way to brand your company or intellectual property. Of course the Licensor will have to purchase these Licensed Products from the Licensee at the price stated in Section 11 (which I will be covering next post).

Next - Licensing Agreement #13 PURCHASE PRICE

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As most of you know, I am not a lawyer or an accountant and I recommend everyone seek their own legal counsel, accounting and tax advice in all contractual matters. I provide consulting which is detailed on the ’services’ page of this website.

Hope this contract breakdown helps you understand the intricacies of a Licensing Agreement. Should you have any questions contact me at info@Playdigm.com - please put ‘Your name & Licensing’ in the subject line of your email.

Thank you.

Sandford Tuey

For the next few posts I will be breaking down a general Licensing Agreement clause-by-clause and giving brief explanations on what it all means. For the beginning of this series of posts, start at the first one dated Sept 14, 2009 (scroll down).

This is the next clause in a Licensing contract:

9. INDEMNIFICATION

9.1 The Licensor hereby agrees to defend, indemnify and hold the Licensee harmless against any claims, demands, cause of action and judgments challenging the authority of the Licensee to use the Property in ‘Schedule A’ by the Licensee as authorized by this agreement.

9.2 The Licensee hereby agrees to defend, indemnify and hold the Licensor and/or any of its related entitles harmless against any and all claims, demands, cause of action and judgments arising out of Licensee’s designs, manufacture, distribution, shipment, advertising, promotion, offering for sale and/or sale of the Licensed Products and/or Promotional materials with respect to the foregoing indemnity, the Licensee agrees to defend and hold the Licensor harmless at no cost or expense to the Licensor whatsoever including, but not limited to attorneys’ fees and court costs. The Licensor shall have the right to defend any such action or proceeding with attorneys of its own selection.

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The first clause of this section allows the Licensor to defend, indemnify and hold the Licensee harmless against any claims, demands, cause of action and judgments challenging the authority of the Licensee to use the Licensor’s Property expressed in ‘Schedule A’ by the Licensee as authorized by this agreement. Therefore allowing the Licensee to use the Licensor’s Property even if the Property is challenged in court or has other claims against it. Of course, a court could decide otherwise but in the event that the Licensor’s Property is being contested in some way, the Licensee can continue to use it unless a court decision deems otherwise.

9.2 The Licensee agrees that if a lawsuit or claim against them arises they will defend, indemnify and hold the Licensor and/or any of its related entitles (associates/entities) harmless. Since there are risks to the Licensee regarding intellectual designs, manufacturing procedures and process, distribution errors or problems, shipment mistakes, advertising and promotional liability, questionable techniques of offering for sale and/or sale of the Licensed Products and/or Promotional materials, Licensor wants to remain protected from Licensee in every way. Also the Licensee agrees to defend and hold the Licensor harmless at no cost or expense to the Licensor. Yet the Licensor shall have the right to defend any such action or proceeding with attorneys of its own selection (insert ‘at their own cost’).

My recommendation is to give the Licensee the same indemnification rights as the Licensor receives in both clauses above. Fair is fair.

Next - Licensing Agreement #12 PREMIUMS, PROMOTIONS & SECONDS

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As most of you know, I am not a lawyer or an accountant and I recommend everyone seek their own legal counsel, accounting and tax advice in all contractual matters. I provide consulting which is detailed on the ’services’ page of this website.

Hope this contract breakdown helps you understand the intricacies of a Licensing Agreement. Should you have any questions contact me at info@Playdigm.com - please put ‘Your name & Licensing’ in the subject line of your email.

Thank you.

Sandford Tuey

For the next few posts I will be breaking down a general Licensing Agreement clause-by-clause and giving brief explanations on what it all means. For the beginning of this series of posts, start at the first one dated Sept 14, 2009 (scroll down).

This is the next clause in a Licensing contract:

8. GOOD WILL AND BENEFITS

8.1 The Licensee recognizes the value of the good will associated with the Licensor’s Property stated in Schedule A and acknowledges that the Property and all rights therein are the good will pertaining thereto, belong exclusively to the Licensor. The Licensee further recognizes and acknowledges that this Property has secondary meaning in the mind of the public. The Licensee agrees that during any Term of the Agreement, or thereafter, it will not attack the title or any rights of the Licensor in and to the Property.

8.2 The Licensee agrees that its use of the Property shall inure to the benefit of the Licensor and that the Licensee shall not, at any time, acquire any rights in the Property stated in Schedule A by virtue of any use it may make of the Property.

8.3 The Licensor agrees that its use of the Product shall inure to the benefit of the Licensee and that the Licensor shall not, at any time, acquire any rights in the Product or related characters/components stated in Schedule A by virtue of any use it may make of the Product.

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Clause 8.1 defines the benefit in and to all the Property are owned solely and exclusively by the Licensor and the Licensee shall not attack in any way verbally, in writing or in court, the value or rights of the Property during the contract or any time after.

8.2 details that the use of the Property by the Licensee does not grant any rights or benefit to the Licensee in any way.

8.3 expresses that the Licensor recognizes and agrees that they will not acquire any rights in the Product bearing their Property and all benefits from the product remain with the Licensee who created it.

Next - Licensing Agreement #11 INDEMNIFICATION

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As most of you know, I am not a lawyer or an accountant and I recommend everyone seek their own legal counsel, accountant and tax advice in all contractual matters.

I provide consulting which is detailed on the ’services’ page of this website.

Hope this contract breakdown helps you understand the intricacies of a Licensing Agreement. Should you have any questions contact me at info@Playdigm.com - please put ‘Your name & Licensing’ in the subject line of your email.

Thank you.

Sandford Tuey