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An IoT solution does not need to be designed or developed fully by the company bringing it to market.
Typically, companies will either buy the IoT solution or choose to license the IoT solution. The purpose of this transaction is to bring it directly to market or to continue developing it – perhaps embedding an AI solution into the IoT solution.
Purchasing the IoT solution
Before purchasing the IoT solution a technical due diligence has to be carried out ensuring sufficient IT-security.
The investigation also needs to look into the use of source codes and license issues with potential open source codes or other licensable application programming interfaces licenses including the use of trademarks in the IoT solution.
Doing a regulatory due diligence is also advised to make sure the IoT solution complies with mandatory privacy legislation and specific sector legislation.
Finally, the IoT solution should undergo a “what if” test throwing possible worst-case scenarios of unintended use upon the IoT solution to identify risks and possible ways of mitigating those.
Licensing the IoT solution
As with the purchase of an IoT solution the same due diligence should be done when licensing an IoT solution.
The license agreement will set out the user terms and limitations as to where and to what the IoT solution can be used for.
Having a geographical limitation can impair the business model of the licensing, as will a limitation of material scope, e.g. only to be used in limited businesses etc.
Non-exclusiveness and other restrictions such as to own additions to the IoT solution for the licensee could also be damaging to the business model especially if competitors can freely use developments of the IoT and if developments by the licensee cannot be claimed as own IP rights.
Finally, licensor should warrant the IoT solution being compliant as to the use intended by the licensee with the possibility to terminate for cause if this is not complied with. A robust description of the intended use is recommended as an addendum to the license agreement.