A Licensing Primer for Trainers
Kimmerling, George, Training & Development
So, you've located (or designed) a terrific training product that you want to distribute. Before you start to market it, make sure your licensing agreements cover all of the bases, especially the royalties.
Lawyers and instructional designers need each other. Without a way to place training products and services in the hands of consultants and users, program creators toil in vain. Even the best programs are only as effective as the efforts to market them. At the heart of such efforts lie licensing agreements. With their dry legal phrases and complicated royalty arrangements, they keep the training industry turning a profit.
At their most basic, licenses are contracts established between two parties allowing one side (the licensee) to perform some activity that the other side (the licenser) has authority to regulate. In the training industry, a license that covers a workbook, videotape, software program, or a training methodology lets the clients use the product or service under certain conditions and for a certain price.
"The entire distribution of training products is built on licensing," says Chris Bloom, an attorney who chairs the intellectual property department at the law firm Bell, Boyd, and Lloyd in Chicago. Training products are protected intellectual property that suppliers rarely sell outright. In this way, the supplier retains the right to license multiple users.
"As the creator, you want to retain ownership and the ability to sell your product a second time," says Bloom, whose clients include the Training Media Association, the Instructional Systems Association, and several suppliers. "That's why you license training products. It's the second sale, not the first, that you care about."
In fact, for training vendors, licensing is an integral part of doing business. "Every use of a Zenger-Miller product entails a licensing agreement," says Owen Griffith, director of operations for the Zenger-Miller division of the Times Mirror Training Group. "We license the client organization that will receive the benefit."
Licensing is also a way for training providers - small and large - to gain access to new markets by using other companies' distribution networks. Wilson Learning Corporation, for example, licenses about 30 "value-added distributors" in the United States. Each handles customers in a major urban area. The distributors purchase Wilson's research, services, and products at a discount. Then they offer them to companies smaller than those in the Fortune 500. Wilson also provides distributors with training and marketing support, and lets them use its logo and the phrase "an authorized distributor for Wilson Learning Corporation" on their letterhead and business cards.
"Through that network," says Dave Ehlen, Wilson's chief executive officer, "we reach into a marketplace that many of our competitors don't access." In fact, Ehlen says that about a third of Wilson's more than $50 million in annual revenue comes through those distributors.
Whether you're looking for a distributor or to land a lucrative license, find out first whether the product or service has any value in the marketplace, advises John Wiedemann, chair of the licensing committee of the American Intellectual Property Law Association. That will determine whether it's worth paying the thousands of dollars in up-front costs often required to obtain a license and whether profits from the license will exceed the royalties.
If the product or service is a moneymaker, find out next whether it's protected intellectual property, which is a legal notion invented to cover nontangible items - such as an innovative design, an image, or a software package - in which individuals can have ownership or other property rights. Generally, the rights are protected by patents, copyrights, trademarks, or they're protected as trade secrets. Permission to share in those rights and to profit from the use of the licensed property is the main reason to obtain a license. …