Like any contract, an international licensing agreement spells out the rights and obligations of the contracting parties, manages potential risks arising out of the contractual relationship and supplies a contingency plan for each party if the contractual relationship breaks down.
What are the elements of a licensing agreement?
What Are the Elements of a Standard Licensing Agreement? Most licensing agreements have standard clauses to cover the issues that arise most often in licensing negotiations. These clauses include the following: Contract length: A licensing agreement has a start date and an end date. One party usually prefers a longer contract than the other.
How to negotiate a licensing agreement like a pro?
- Identification of the parties. ...
- The whereas-es. ...
- Define it. ...
- What is being granted? ...
- If the licensor is a non-profit entity, it may also want to specify what rights are reserved for non-profit research, humanitarian, or educational purposes under the Bayh-Dole Act. ...
- Terms. ...
What is international licensing?
What Is An International Licensing? In an international licensing agreement, foreign firms are permitted to manufacture a proprietor’s product for a fixed period in a specific market, either exclusively or non-exclusively. What Is An Example Of Licensing? Licenses can be used by companies to design popular characters, for example.
What is the definition of licensing in international business?
Licensing is a business agreement involving two companies: one gives the other special permissions, such as using patents or copyrights, in exchange for payment. An international business licensing agreement involves two firms from different countries, with the licensee receiving the rights or resources to manufacture in the foreign country.
What is international licensing example?
Examples. Suppose Company A, a manufacturer and seller of Baubles, was based in the US and wanted to expand to the Chinese market with an international business license. They can enter the agreement with a Chinese firm, allowing them to use their product patent and giving other resources, in return for a payment.
What are the 3 types of licensing agreements?
Generally, there are three types of licensing agreements: exclusive, sole, or non-exclusive. In an exclusive license, the licensee is only the party that can use the licensed intellectual property.
What is international licensing and what are its advantages?
International licensing agreements are agreements between two companies, in which one company grants the other company the right to manufacture, sell, or market its products and services in a different country. This has become an increasingly popular way for companies to enter new markets and expand their businesses.
What is meant by licensing agreement?
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.
What are the two 2 types of licensing agreement?
Specific Types of Licensing Agreements Trademark licenses: Outlines how you may use a trademark. Patent licenses: Outlines your right to sell, use, make, distribute, and export a product that's patented.
What are the 4 main licensing objectives?
The 4 licensing objectives the prevention of crime and disorder. public safety. the prevention of public nuisance. the protection of children from harm.
What are the advantages and disadvantages of international licensing?
Exhibit 15.3AdvantagesDisadvantagesDoes not require capital investment or presence of the licensor in the foreign marketRevenues are usually more modest than with other entry strategiesAbility to generate royalty income from existing intellectual propertyDifficult to maintain control over how the licensed asset is used1 more row
What are the pros and cons of licensing in the international market?
Advantages and Drawbacks of Licensing Intellectual PropertyIncome without overhead. ... Potentially better marketing. ... Enter foreign markets more easily. ... Diffuse conflicts. ... Risk of IP theft. ... No guarantee of revenue. ... Unintended competition. ... Risk of diminished reputation.More items...•
What is importance of licensing in international business?
Licensing generally involves allowing another company to use patents, trademarks, copyrights, designs, and other intellectual in exchange for a percentage of revenue or a fee. It's a fast way to generate income and grow a business, as there is no manufacturing or sales involved.
What is the key benefit of a licensing agreement?
The advantages of licensing agreement include increasing market share, lowering capital requirements, increasing the return on investment, and decreasing financial and legal risks.
Why is a licensing agreement important?
An effective licensing agreement is the most effective solution for protecting your intellectual property. A licensing agreement allows owners of intellectual property to authorize third parties to use, alter, or resell the property for a mutually agreed-upon price, without transferring ownership to the third party.
What is the purpose of licensing?
Licensure provides permission to practice in a particular field. Careers which require licensing typically require a specialized skill, are deemed dangerous or affect the general public. Examples of careers requiring licensure are physicians, dentists, nurses, pilots, lawyers, accountants and psychologists.
Why are the 3 licensing objectives so important?
preventing gambling from being a source of crime or disorder, being associated with crime or disorder, or being used to support crime. ensuring that gambling is conducted in a fair and open way. protecting children and other vulnerable persons from being harmed or exploited by gambling.
What are the different types of licenses?
The different types of software licensesPermissive. Permissive licenses contain minimal restrictions on how the software can be modified or redistributed. ... Weak copyleft. ... Copyleft. ... Commercial or proprietary. ... Dual. ... Public domain. ... Unlicensed.
What type of licensing agreements are available?
There are three key types of licences.Exclusive Licence. An exclusive licence, as the name suggests, is a licence that allows the licensee exclusively to both use and commercialise your IP. ... Non-Exclusive Licence. A non-exclusive licence allows you to licence the IP to multiple different parties. ... Sole Licence.
What are the different types of agreements?
Types of AgreementsGrant. Financial assistance for a specific purpose or specific project without expectation of any tangible deliverables other than a final report. ... Cooperative Agreement. ... Contract. ... Memorandum of Understanding. ... Non-Disclosure Agreement. ... Teaming Agreement. ... Material Transfer Agreement. ... IDIQ/Master Agreement.More items...
What Is a Licensing Agreement?
The term licensing agreement refers to a legal, written contract between two parties wherein the property owner gives permission to another party to use their brand, patent, or trademark. The agreement, which is set between the licensor (the property owner) and the licensee (the permitted party), contains details on the type of licensing agreement, the terms of usage, and how the licensor is to be compensated. Contract types vary based on what is being licensed. Licensing agreements also alleviate any disputes related to sales, issues of quality, and royalties.
How to license a property?
In addition to detailing all parties involved, licensing agreements need to specify in granular detail how licensed parties may use properties, including the following parameters: 1 The geographical regions within which the property may be utilized. 2 The time period parties are allotted to use the property. 3 The exclusivity or non-exclusivity of a given arrangement. 4 Scaling terms, such that new royalty fees will be incurred if the property is reused a certain number of times. For example, a book publisher may enter a licensing agreement with another party to use a piece of artwork on the hardcover editions of a book, but not on the covers of subsequent paperback issuances. The publisher may also be restricted from using the artistic image in certain advertising campaigns. 1
Why do licensors have contracts?
Contracts give licensors can retain a great degree of control over their property and gives them access to other markets. For instance, a licensor can dictate how their property is marketed. And it allows them to enter new markets—through the licensee—without actually having to set up shop there. 2
How to estimate royalty rates?
To accurately estimate royalty rates, the transactions between the buying and selling parties must be willingly executed. In other words: the agreements must not be forced. Furthermore, all royalty transactions must be conducted at arm's length, meaning that both parties act independently, and have no prior relationship with one other.
How to use someone else's intellectual property?
If you want to use someone else's property—especially intellectual property—you'll have to ask that party to enter into a licensing agreement with you. You'll probably have to go through a lawyer to ensure that your interests and those of the property holder are safeguarded . You may have to spend some money to get the agreement drawn up, but by doing so, your financial assets and business will be well taken care of and you're guaranteeing that the relationship with the licensor will be smooth.
What factors affect royalty rates?
The many factors that can affect royalty rates include exclusivity of rights, available alternatives, risks involved, market demand, and innovation levels of the products in question. To accurately estimate royalty rates, the transactions between the buying and selling parties must be willingly executed.
Why does a licensee lose out?
The licensee also loses out, too. That's because relying on someone else's product means that the licensee may cut down its own research and development (R&D) Pros.
What is an example of a licensing agreement?
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.
What is a license agreement?
A licensing arrangement is created when one party, the licensor, which owns, or otherwise controls the right to specify the uses of a valuable legal right, grants to the other party, the licensee, the right or license to utilize the legal rights for the purposes specified in the contract between the parties. This form is an international licensing agreement that provides for the license of United States and foreign patents, and the related know-how, to a foreign party in order to permit the foreign party to manufacture and sell specified products in a defined foreign territory.
What skills are needed to negotiate a transaction involving the licensing of technology or other IP internationally?
Specialized skills are needed to negotiate a transaction involving the licensing of technology or other IP internationally. Strong expertise in both intellectual property and commercial law is required, as well as business acumen, knowledge of industry best practices, and experience in international business transactions. Because international technology license transactions involve additional risks, companies should work closely with experienced international technology transactions lawyers to protect their interests.
What is an international technology license?
An international technology license involves the owner of a patent, trade secret, trademark or copyright (i.e., “intellectual property” or “IP”) granting another person or entity permission to use their IP. A license to use IP related to technology can include hardware, software and data, and other forms of technology. All technology licenses must be carefully crafted to protect the IP owner’s interests, but International technology licenses involve special considerations due to the impact of foreign country IP laws, among other considerations.
What Is a Licensing Agreement?
- The term licensing agreement refers to a legal, written contract between two parties wherein th…
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 …
Some examples of things that may be licensed include songs, sports team logos, intellectual property, software, and technology.
Understanding Licensing Agreements
- Licensing agreements delineate the terms under which one party may use property that is owne…
Licensing agreements are widely used for the commercialization of new discoveries or technologies. - In addition to detailing all parties involved, licensing agreements need to specify in granular deta…
The geographical regions within which the property may be utilized.
Licensing Revenues
- Licensing revenues, known as royalties, are a significant source of revenue for several publicly tr…
The terms of royalty payments are laid out in a license agreement. The license agreement defines the limits and restrictions of the royalties, such as its geographic limitations, the duration of the agreement, and the type of products with particular royalty cuts. License agreements are uniquel… - In most license agreements, royalty rates are defined as a percentage of sales or a payment per …
To accurately estimate royalty rates, the transactions between the buying and selling parties must be willingly executed. In other words: the agreements must not be forced. Furthermore, all royalty transactions must be conducted at arm's length, meaning that both parties act independently, an…
Examples of Licensing Agreements
- Licensing agreements are found in many different industries. An example of a licensing agreem…
An example of a licensing agreement in the restaurant space would be when a McDonald's franchisee has a licensing agreement with the McDonald's Corporation that lets them use the company's branding and marketing materials. Toy manufacturers also routinely sign licensing a…
Entering Into a Licensing Agreement
- The bargaining power of the two parties involved in a licensing agreement often depends on the …
Those entering into a licensing agreement should consult an attorney because there are complexities that may be hard to grasp for those without a deep understanding of intellectual property law.
Advantages and Disadvantages of Licensing Agreements
- As mentioned above, licensing agreements are legal contracts that are written between a licens…
Licensing agreements clearly lay out the guidelines, rules, and stipulations that cover the use of the licensor's brand, patent, or trademark. Both the licensor and the licensee are fully aware of what is expected and required of them. This includes when payment is due and how much, any a…
Licensing Agreement FAQs
- What Is a Licensing Agreement Example?
Entertainment companies like Netflix enter into licensing agreements all the time. The online streaming service obtains the right to broadcast content either exclusively or with other companies from the title/content owners. For instance, the company behind a major television s… - How Do Licensing Agreements Work?
Licensing agreements are legal contracts that are written between two parties—a 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. Licensing also …
The Bottom Line
- If you want to use someone else's property—especially intellectual property—you'll have to ask that party to enter into a licensing agreement with you. You'll probably have to go through a lawyer to ensure that your interests and those of the property holder are safeguarded. You may have to spend some money to get the agreement drawn up, but by doing so, your financial assets and b…