What is a license agreement? Basically, a license agreement is a contract that allows one person to use another person`s property for a certain price.3 min read As you can see, there are many types of licenses. An experienced intellectual property attorney can help you determine the type of license agreement you need and what should be included in this agreement. Do your due diligence before the agreement. Both parties should carefully check the other party. Review business loans and management resumes. Ask for financial statements. Visit the other company`s offices and production facilities. Try everything. Licensing agreements can cover a variety of properties: real estate, personal property, or intellectual property such as copyrights, trademarks, or patents.
To protect yourself and your business, it`s important to be thorough when creating a license agreement. Both the licensee and the licensor must have a clear understanding of what they are accepting. Consider the following tips before you begin: Non-compete. Licensor agrees not to allow anyone to compete with the License in the territory and period specified in the Agreement. A license agreement is a legal agreement between two parties, called a licensor and licensee. In a typical license agreement, Licensor grants Licensee the right to manufacture and sell goods, enforce a brand name or trademark, or use Licensor`s patented technologies. In return, the licensee generally submits to a set of terms and conditions for the use of the licensor`s property and agrees to make payments called royalties. Copyright licensing agreements are often used for consumer goods, as are trademark licenses. They are also used for prizes, such as musical works or movies. Those entering into a licensing agreement should consult a lawyer as there are complexities that are difficult to understand for those who do not have a thorough understanding of intellectual property law.
License agreements ensure that you have legal permission to use another person`s or company`s property. For example, if you were to use an artist`s song in an advertisement, you`ll need to sign a license agreement to do so legally. If you use the song without permission, you may violate copyright laws and risk being sued or fined. Depending on the authorized ownership, royalties can be either a lump sum or a percentage of what the licensee earns using the product. When licensing a product, the licensor almost always requires monitoring of the product to ensure that it is being used correctly. For example, Licensor may require product quality control before Licensee makes sales. In addition to an initial review, many licensors require regular quality monitoring throughout the term of the license agreement. The bargaining power of both parties to a licensing agreement often depends on the nature of the product. For example, a film studio that licenses the likeness of a popular superhero to an action figure creator could have significant bargaining power in this negotiation, as the manufacturer is likely to benefit enormously from such an agreement.
The film studio therefore has the leverage to take its business elsewhere if the manufacturer is cold on its feet. Examples of licenses can be found in many different industries. An example of a license agreement is an agreement between software copyright holders and a company that allows them to use the computer software for their day-to-day business operations. A license agreement allows a licensee to use the property of a licensor. These written agreements set out a number of parameters for the use of Licensor`s property. This means that the licensed property may not be used for any purpose, even under a license agreement, except as provided in the agreement. According to BrewLong`s attorney, Ashely Brewer, „Licensing agreements are like leases. Much depends on the property in question and the relationship between the parties. » Hire a lawyer who has expertise in licensing agreements.
These agreements are complicated and specific to each situation. Many lawyers know how to create a general contract, but they may not know the details of licensing agreements. An IP lawyer could be a good place to start. Establish the property first. If you sell or purchase a license for a product, make sure that ownership of that product is clearly stated in the agreement. Also, make sure that no one else is using the asset (e.B. a trademark) and register the trademark or register a copyright. You don`t want to get into a license agreement and then find out that someone else is questioning the property.
The most important part of the license agreement is the exchange of values. In order to obtain the right to use Licensor`s intellectual property, Licensee pays a royalty called the License Fee. If someone has a franchise, there may be a license agreement, and there may be several types of licenses within the franchise. For example, a McDonald`s franchise could include licenses to use the McDonald`s logo on products and packaging, as well as another license to manufacture its patented processes or product ingredients. The term license implies to allow by granting powers. Therefore, a license agreement is a contract between two parties – namely the licensor and the licensee. This is usually a written contract in which the owner allows the licensee to use their property for a certain period of time. The licensor usually receives money to serve in return by allowing access to their property. License agreements are usually signed to secure intangible properties, such as patents, copyrights, trademarks to protect technological innovations, company names, logos, and others.
In the event of an extreme license agreement, Licensor gives Licensee flexibility to manufacture and sell products, use its brand name, or use Licensor`s patented technological know-how. This article is only a general overview of license agreements; It is not intended to be complete and should not be used to prepare a legal document. Using a template that you find on the Internet is dangerous because it cannot meet certain laws and your own situation. Exclusive licences are those which create a unique relationship between the licensor and the licensee. With such license agreements, the licensor agrees that the licensee is the only one who can use the intellectual property. These usually cost more for the licensee. A company has the ability to license virtually any of its assets. However, most licensing agreements include intellectual property such as trademarks. Today, many licensing agreements include digital assets such as smartphone apps. Licensing agreements are often used for the commercialization of technologies. License agreements set out the terms under which one party may use another party`s property. While the properties in question may include a variety of elements, including real estate and personal effects, licensing agreements are most often used for intellectual property such as patents and trademarks, as well as copyrights for written materials and visual arts.
The license agreement must include language that addresses the issue of ownership disputes. For example, what happens if someone refuses ownership of a trademark that you have licensed? Or what if someone plagiarizes the copyrighted work that is licensed? Both parties to the license agreement must agree on how to deal with these issues. An example of a very common property included in licensing agreements is the image of a movie superhero. Toy makers often allow this to sell action figures, which are much more likely to be bought if they are based on a popular superhero. Another common example is the licensing of a song for an advertising campaign or for use in a movie. In the fast food market, there are a number of companies based on the franchise concept, in which a franchise owner licenses the rights to the name, products and promotional material of the main company. There are certainly benefits to licensing your company`s assets, but be sure to consider these factors when creating a licensing agreement: Christian, Glynna K. „Joint Ventures: Understanding licensing issues.“ The License Journal. October 2005. One of the most important elements of a licensing agreement concerns the financial regulation.
Payments made by Licensee to Licensor are generally made in the form of guaranteed minimum payments and royalties on sales. The license fee is usually between 6 and 10%, depending on the respective property and the level of experience and sophistication of the licensee. Not all licensors require guarantees, although some experts recommend that licensors receive as much compensation as possible in advance. In some cases, licensors use warranties as the basis for renewing a license agreement. If the licensee meets the minimum sales figures, the contract will be extended; Otherwise, the Licensor has the opportunity to terminate the relationship. A license agreement is a written agreement that gives you permission to use another party`s property under certain conditions. .