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In a typical licensing agreement, the licensor grants the licensee the right to produce and sell goods, apply a brand name or trademark, or use patented technology owned by the licensor.
Examples of common licensing agreements include: A sports team allowing another company to produce t-shirts with the team's logo. A movie company that allows another company to create a toy based on a character the movie company owns.
The licensing agreement should explain what the licensee can do with the license. It should say whether the license is exclusive or not. It should also discuss whether the licensor gets to use the license or cedes all rights to the licensee.
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 brand and trademark licensing can also be of two types. In the first type, the fee of the license is independent of the sales and profits made by the licensee. In the second type, the fee of the license is dependent on the sales and profit generated by the licensee.
Licensing agreements are legal contracts that are written between two partiesa licensor and licensee. The contract stipulates the type of agreement, the length of the relationship, payments and royalties that are due and when, and the extent to which licensing is allowed.
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.
How to decide between types of licensing agreementsPatent Licensing. Patents cover science and innovation.Trademark Licensing. Trademarks are signifiers of commercial source, namely, brand names and logos or slogans.Copyright Licensing.Trade Secret Licensing.Exclusive.Non-exclusive.Sole.Perpetual.More items...?
Precisely identifying which intellectual property will be the subject of the license is necessary to ensure both parties are on the same page and not exceeding their rights.Scope of the Grant.Exclusivity.Territory.Term.Compensation.Termination.Conclusion.