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Types of licensing agreement The unique feature of this type of agreement is that even the licensor is excluded to use or exploit the licensed property during the term of the agreement. Copyright, trademark and patent licenses are the best examples of an exclusive license agreement.
A royalty is a legally binding payment made to an individual or company for the ongoing use of their assets, including copyrighted works, franchises, and natural resources.
A license is an agreement between two parties for using someone's property without paying any money for it, whereas royalty is paying an agreed fee each time he/she use the owners asset.
The difference between an End User License Agreement (EULA) and a Software License Agreement (SLA) depends on intended usage. The EULA generally governs the continuous use of the software by a group of individuals. Meanwhile, an SLA targets a specific entity for a finite period.
A licensing agreement is a contract between two parties (the licensor and licensee) in which the licensor grants the licensee the right to use the brand name, trademark, patented technology, or ability to produce and sell goods owned by the licensor.
Examples of licenses include a company using the design of a popular character, e.g. Mickey Mouse, on their products. Another example would be a clothing manufacturer like Life is Good licensing its designs and brand in a certain country to a local company.
A licensing agreement allows one party (the licensee) to use and/or earn revenue from the property of the owner (the licensor). Licensing agreements generate revenues, called royalties, earned by a company for allowing its copyrighted or patented material to be used by another company.
Practitioners and licensing executives often refer to three basic types of voluntary licenses: non-exclusive, sole, and exclusive. A non-exclusive licence allows the licensor to retain the right to use the licensed property and the right to grant additional licenses to third parties.
The general rule based on several IRS Revenue Rulings is that royalty income from the license of a software copyright should be sourced to the place where the licensee sells the product or provides the service which utilizes the licensed software.
Licensing agreements are found in many different industries. An example of a licensing agreement is a contract between the copyright holders of software and another company, allowing the latter to use the computer software for their daily business operations.