Deciding How to Structure You IP License's Sublicenses

Owners of intellectual property (IP) may permit third parties to use the owner's IP. In the simplest situation, a licensor grants the right to the licensee, and it ends there.

But in some cases, the licensor and licensee want the licensee to offer licenses to that IP to third parties. In these cases, the licensee is a middleman between the licensor and those end users.

There are two main ways to set up this arrangement. One way is for the licensor to directly grant the license to those end users through an End User License Agreement (EULA). The other way is to permit the licensee to sublicense the IP to its end users.

I look at three key factors to make that decision:

1. Is the end user's use similar in scope to the licensee's use?
2. Will the end user's rights end at the same time as the licensee's?
3. Does the licensor want the licensee liable for its end users?

The direct license versus sublicense decision starts with these questions but doesn't end there. Other factors like tax implications, delivery mechanisms, and end user support also factor in.

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Here's a link to the original LinkedIn post so you can read the comments.