Licensing Agreement Defined

Another common element of licensing agreements is the party that retains control over copyrights, patents or trademarks. Many contracts also contain a provision on territorial rights or distribution in different parts of the country or the world. In addition to the various clauses included in the licensee protection agreements, some licensees may add their own requirements. They may insist on the guarantee that the licensee owns, for example, the property`s property rights, or they may insert a clause prohibiting the licensee from directly competing with the property granted in certain markets. Christian, Glynna K. “Joint-Ventures: Understanding Licensing Issues.” The licensing newspaper. October 2005. Because of the legal basis they have to cover, some licensing agreements are quite lengthy and documents complex. But most of these agreements cover the same fundamentals. These include the scope of the agreement, including restrictions on exclusivity or territories; financial aspects, such as necessary advances, royalties and royalty calculations; Guarantees for minimum sales Calendars with “on-the-market” dates, contract duration and renewal options; the lessor`s rights to quality monitoring and control, including procedures to follow; Minimum inventories that need to be maintained and returns and allowances. Licensing agreements are often used for the commercialization of technologies. A license is usually established by an explicit or tacit agreement.

The licensee must approve the license, which can be shown in writing, or the licensees who accept their exercise. In addition, unlike many other contractual agreements, a license does not require consideration, a license can be established with or without it. In addition, the question of whether an agreement is considered a “licence” and not a tenancy clause depends on three essential characteristics of a licence: (1) a clause authorizing the licensee to revoke “as he sees fit”; (2) the maintenance of absolute control of the premises by the licensee; and (3) the provision to the licensee of all essential services necessary for the authorised use of the premises by the taker. [5] This article is only a general overview of licensing agreements; It is not complete and should not be used to prepare a legal document. Using a model that you find on the Internet is dangerous because it cannot address certain laws and your own situation. For a company that has an excellent product but does not have the capacity to manufacture it, licensing is a great way to market that product. Entrepreneur says that, among the possible opportunities to market a product, licensing “offers the greatest potential return on investment and has the greatest chance of success.” One of the most important elements of a licensing agreement is the financial agreement.