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Infinite Water Licensing Basics And Background

Our basic definition of licensing is rather straightforward, if somewhat legalistic. A license is an agreement through which we lease the rights to a legally protected piece of intellectual property (Patent or Trade Secret) from Infinite Water, Inc. — for use in conjunction with a product or service.

But the relative simplicity of that definition is a mere gateway to a way of doing business in an ever-widening range of product categories and types of properties.

Infinite Water Licensing is a marketing and brand extension tool that can be used by everyone from major corporations to small business.


Terms and Definitions

Infinite Water Licensing is defined as the process of leasing a Patented or Trademarked entity (known as a “property”) for use in conjunction with a product or service. Licensing is usually based on a contractual agreement between two business entities: Infinite Water or (Agent) of the property, also known as the licensor and the renter of the rights, and the prospective licensee – generally a manufacturer or distributor who believes that by using the property as a technology tool, it can sell more of the product or otherwise attach itself to the beneficial characteristics generated by the property.

The formal permission to use Infinite Water’s property is subject to certain terms and conditions, such as a specific purpose, a defined geographic area, and a finite time period. In exchange for granting the rights,  Infinite Water obtains a financial remuneration. The basic component of this payment is the royalty — in most cases a percentage of the licensee’s sales of products covered by the license. Most of Infinite Water’s licensing also includes a “guarantee” or “minimum” – a sum that the licensee is required to pay to the licensor even if little or no product is sold. A percentage of this guarantee is often paid as an advance at the time the deal is signed.

Nations outside the U.S. currently account for enormous potential of the worldwide total of licensed product revenue. The use of Infinite Water licensing properties, internationally on a range of products, potentially reduces both marketing costs and the cost of research and development as well as manufacturing otherwise required for developing the property individually.

There is no doubt that licensing in global markets has important advantages for companies that either cannot or do not wish to invest in research and development or import of products, but before developing products, licensees should keep a number of key issues in mind, such as the many cultural, linguistic, legal and financial differences that exist in different territories. Thinking globally involves the ability to understand markets and requires knowledge of the political and economic situation in the country where a license is to be granted. Of particular importance is the understanding of global consumer behavior and the knowledge of the prospective licensee and their needs and capabilities.


Factors before entering a new market or product distribution program

As companies seek to tap new markets in their countries, the question arises as to whether licensing strategies which are effective in one market will also be effective in other market. Therefore it is particularly important for a licensee to realize that each market differs in its specifics and must be looked at as a separate territory. Differences may exist, not only in language and the relative effectiveness of different licensing strategies, but also in such areas as market structures, retail patterns, legal systems, limitations and tax implications.

Whether you are going to represent yourself or work with an attorney or licensing professional, it is a worthwhile endeavor to engage in some of the strategic thinking, which must be the precursor to any memorialized deal.

First, when embarking upon a licensing path it is absolutely essential that you stop thinking in terms of a template for a license and start thinking in terms of clauses for a license. The reason for this is every situation is different. Certainly there are standard clauses that need to be there, but a license is just an agreement between the parties who sign the document and enter into a business relationship. As a result, the license needs to memorialize what Infinite Water and the other party have or will agree to moving forward.

Notwithstanding what is said above, when we draft a license, we start with our draft agreements and modify them to fit the particular situation and desires of the parties. That is the way we always develop agreements. The best place to start is to review our sample licensing agreement as a starting point.



As for what needs to be in a license, there are a lot of things that do, but definitely pay particular attention to how you will pay royalties. After all, that is the primary reason the Infinite Water wants to enter into such an arrangement with you.

The agreement can never contemplate everything, but with respect to payment, Infinite Water needs protection. What if the licensee is paying Infinite Water a defined percentage of sales but then decides to offer our product for free, or as an add-on to a sale, as is common in direct TV marketing? If our product is used as a “come on” and given away for free even 100% of $0 is still $0. That is why some type of minimum payment is required in our Agreements.

With this in mind, many times we accept a lesser royalty on gross sales proceeds rather than a larger royalty on net profits. It is also easier from an accounting perspective to just use gross proceeds.

It is also a requirement to include a clause that allows for some form of an accounting, which will allow Infinite Water to access the financial records to verify compliance with royalty requirements. Of course, we also want clear due dates for payments and likely penalties for late, or at least repeatedly late, payments.



In addition to the aforementioned financial terms, we also consider include the following:

  1. Patent Marking: According to 35 U.S.C. 287(a), we cannot receive damages in a patent infringement action unless the product being is “marked” with the U.S. Patent No. The statute explains: “[N]o damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice.” So we make sure there is some requirement that the licensee mark the product with our Patent No.
  2. Type of License: What kind of license do you want? There are primarily three choices: (1) an Exclusive License; (2) a Non-Exclusive License; or (3) a Sole License. An Exclusive License is one where we basically transfer all of the rights to make, use, sell and import to a single entity. With a Non-Exclusive License we transfer the rights to make, use, sell and import but also reserve the right to license others; thus the Non-Exclusive License is frequently characterized merely as permission or a covenant not to sue. A Sole License typically permits both the patent holder and licensee to exploit invention covered by the patent, so it falls between an Exclusive License and Non-Exclusive License in terms of the rights conveyed. Generally speaking, the more rights we give the licensee the higher we expect your payments to be.
  3. License Duration: How long do you want the license to last? Before you say “as long as possible,” consider the real possibility that sales might not meet expectations, which means your payments might be quite a bit harder to pay than you anticipated. The last thing we want is to get locked into an underperforming agreement that wastes patent and market life-span when other options might prove more lucrative. With this in mind we might have the license last for an initial period and be renewable, or have the license terminate in the event sales do not reach a particular threshold or if they decline. Having a minimum payment to us, that we can live with, makes this somewhat less important, but not irrelevant.
  4. Patents & Trade Secrets: Once upon a time it was more difficult to obtain a license without an issued patent, and some companies still adhere rather strictly to the requirement a patent already be issued  prior to licensing. Many companies, including Infinite Water however, will consider licensing a pending patent application. But what happens if the U.S. Patent and Trademark Office refuse to issue a patent? Does our licensing agreement evaporate? No. Even if we never obtain a patent, you      have and are still provided with something of value. The information Infinite Water disclosed, which we didn’t have to disclose, is protected as a trade secret, which is quite valuable. Therefore, we want to make sure any agreement relates to both patents and trade secrets. While we cannot collect on a patent license after the patent expires we can still see great value on a trade secret license under the right factual scenario.
  5. Right to Sub-license: If we give you a license and you  have a right to sub-license you are allowed to provide others permission  to use our patent/invention. With the right accounting procedures in place  this isn’t likely very problematic in the case of an Exclusive License. We just want to get paid the agreed rate per each sale. But sub-licensing or  even licensing subsidiaries in the case of a Non-Exclusive License or Sole  License can be more concerning. We just want to make sure we know who will or could get rights and how we would get paid. If we are entering into a Sole License and expecting only you and one other company in the market we might not want sub-licensees cannibalizing market share even if we do get paid.
  6. Dispute Resolution: By this point this type of clause is likely standard in most every contract or license we issue, but you want to consider what happens if everything goes bad and there is a disagreement about what the terms of the agreement mandate.