Negotiating & Contracting
the Acquisition of Privately Held Intellectual Properties

Part Two
By Harlington L. Hanna Jr.

The Need for Effective Collaboration

Another important aspect is that more than ever the global market requires a tremendous amount of collaboration and understanding of intellectual property customs, regulations and laws if you are to operate at the number one level of the hierarchy previously presented. This collaboration becomes essential as you cross national lines, boundaries and barriers in your search for big entertainment dollars. Just a cursory look at the money sources in entertainment shown elsewhere in this book should demonstrate that to make real money in the modern marketplace you must have a global and international perspective. This global and international perspective will demand collaboration. In negotiating agreements it is essential that they include opportunities for participants necessary for the effective exploitation of the I.P., and allow flexibility in transfer, assignments and disposition of the assets when applicable. Remember no man is an island. Full exploitation in the global economy will require adequate partners in the process. Just take a look at all of the mergers, acquisitions and corporate partnering that is going on in the current global marketplace. The effective negotiator will understand the present and future needs for full exploitation and will include provisions for such in the acquisition negotiations. He may want to prepare and present his collaborative plans for the project in his efforts to convince the I.P. holder of his ability to exploit the product.

Remember that in most cases the I.P. holder is himself a collaborator in the project since many acquisitions are not outright transfers or sales but agreements giving the transferee a controlling interest or license and providing the original I.P. holder with royalty income participation. In such cases the I.P. owner will want to be assured of the transferees ability to deliver a successful project.

Some may feel that collaboration is primarily needed to bridge the international markets and their different markets, players, and legal needs. However don't be fooled into believing that collaboration is not needed just because you may sit in the Untied States or some other major market country. Because of the control of multinational companies in the marketplace and because of the customs, practices and intrinsic development of the entertainment industries, effective collaboration is needed even on a wholly domestic basis.

What this really means for the individual entrepreneur is that the business learning curve just got a little more sophisticated and difficult. But the solution to the complexity of the problem is collaboration itself. Those searchers for the real money in the entertainment marketplace must learn to work with others, to give up a part of the pie, to put in and supply their piece of the pie, to build their own network and finally, to coordinate all of the aspects of this complex picture while legally and financially protecting their piece of the pie.

The producer or holder of an entertainment property must be able to collaborate with distributors, promoters, artists, customers, and other intellectual property holders in order to reach that all important dollar. The greater the ability to effectively collaborate the greater the chances for ultimate success.

Generally you should attempt to collaborate on ownership or control with fellow entrepreneurs you already know. This provides for an added level of security. Joint venturing with fellow entrepreneurs is an important practice in the entertainment business. Such partnerships can be structured with a money investor, a studio, the artist, the producer and any other parties needed to make the project work. The agreements between the parties must be written and well designed. The contractual readiness of the parties is important. These joint ventures can be very successful if properly planned and consummated. More than anything else they spread the risk of doing business. However due to the fact that they inherently include more people there are more potential problems. Joint ventures are however extremely important where a lack of financial resources exists, as is usually the case in most entertainment projects.

A significant amount of consideration must be given to the business form the joint venture will take. Based on the particular facts and circumstances the joint venture could take form as a corporation, a general partnership, a limited partnership, or a mixture of each of these. Without a doubt some experience legal assistance should be employed in any serious joint venture effort.

It is important to note that joint ventures may be quite successful between an established business and a much smaller business entity. In fact in some respects much of the business being done in the software industry now takes this form, with large companies such as Microsoft in effect joint venturing with much smaller software developers. In addition today more and more large record companies in effect joint venture with smaller entities on many projects. The classical independent producer deal where a major record company will contract with an independent producer to do a production is a classical example. Joint venturing with an established business entity provides significant advantages because the established business has a track record, experience, contacts, and credibility which the small or new business entity can substantially benefit from. Entrepreneurs should always attempt to collaborate with a more established entity if possible.

Partnering with venture capitalists can also be a source of financial support. Today it is also possible to find venture capitalists who go beyond simply providing the money behind the project. Many venture capitalists will provide other important services and resources to ensure that their investment has the best opportunity to be successful.

Finding a Network or Base of Support

Closely aligned with developing collaborators and building credibility is your ability to work from within some type of network structure which supports your efforts in developing your project or building your business. Most available networks exist in the form of professional organizations such as the various songwriter and other talent based membership organizations which represent individuals and companies who have similar purposes and objectives. "No man is an Island" has never been more true than today in the modern business environment. Entertainment entrepreneurs should make every effort to find and participate in some sort of organization and or network which provides support and opportunities for interaction with others in the same boat. The knowledge and insight that can be gleaned from such relationships are enormous and cannot be overlooked if you are serious about success. Needless to mention your search for such a network should be judicious since some organizational networks will be better for certain purposes, individuals or companies based on their peculiar facts and circumstances.

Members of such organizational networks have a tremendous advantage over others who have no network support. Remember matching and competing with competition is the key to success. It is almost impossible for a non-networked individual or business to compete with a networked one in this modern economy.

As an entrepreneur in the Entertainment marketplace there are some important general considerations in determining value, strategies and contracts for the private acquisition of entertainment intellectual properties.

 

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For Further details of the Hannaian Business network and its associated business opportunities visit the Business Opportunities Section of the Hannaian Publishing Website at
http://www.hannaian.com/distribr.htm