In a software license transaction with a company where one entity is granting a license and its affiliate is providing maintenance and support, be sure both parties possess the necessary intellectual property rights to provide their intended services. The deal may be structured where Affiliate A owns and is licensing the core intellectual property, and Affiliate B is providing maintenance and support, including making the source code available under appropriate circumstances. In this situation, be sure that Affiliate B has the license from Affiliate A to revise the software as needed, and the rights in and access to the source code to provide the source code to the licensee or an escrow agent. Also make sure that any software Affiliate B creates during the maintenance process is assigned or licensed to Affiliate A, so it is included as part of the entire software package Affiliate A is granting to the licensee. A similar evaluation is needed in other types of intellectual property transactions. For example, sometimes trademarks and patents are owned by a holding company, so that holding company needs to assign or grant a license to the IP when the core deal focuses on the disposition of the operating affiliate.
Ned T. Himmelrich
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