In a typical license agreement, the licensor undertakes to provide the licensee with intellectual property rights such as the licensor`s technology, brand name or product creation know-how. In exchange for licensor`s intellectual property, licensee generally pays an upfront fee and/or license fee to the licensor. A licence fee is a continuing royalty paid for the right to use the licensor`s intellectual property. Another common element of licensing agreements is which party retains control over copyrights, patents or trademarks. Many treaties also include a provision on territorial rights or who manages distribution in different parts of the country or world. In addition to the various clauses inserted in the agreements to protect the licensor, some licensees may add their own requirements. For example, they may require a guarantee that the licensor owns the rights to the property, or they may include a clause prohibiting the licensor from competing directly with the property granted in certain markets. 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 perpetual license is a license in which the licensee acquires the right to use the IP only once and can then use it for the rest of his life. Often, this is the most expensive type of license because the licensor does not receive ongoing royalties. Payments.

As mentioned above, the licensee usually pays royalties to the licensor. There may be an initial advance on royalties, and then the current royalties are based on sales. Royalties can be paid based on a percentage of sales or a lump sum. Think about which method works best for both parties (and don`t forget about inflation and exchange rates). 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. The license fee for a license agreement is usually 6-10%. It varies depending on factors such as the quality of the intellectual property and the experience and needs of the licensee. This section restricts when and where the Licensor may sell its property. It ensures that the licensee may be the only entity that sells that product or service in a particular territory.

For example, a Burger King franchisee would like to be the only Burger King in a particular area. Without this deal, the licensor could allow another Burger King franchise to appear next door. With so many negotiation fields for a license agreement, everything can lead to problems. This is especially true if the lawyer drafting the license agreement uses too broad language. Nevertheless, four areas are the most likely causes of a license agreement dispute: Perform 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.

In business, licenses are usually issued by a company that wants to transfer rights to another company in exchange for payment. Usually, these rights consist of making, selling or using something that your company owns. 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 (for example. B, a trademark) and register the trademark or register it for copyright. You don`t want to get into a license agreement and then find out that someone else is questioning the property. Are you planning to license something you own, but you`re not sure about the different types of licensing agreements? There are several ways to grant an intellectual property (or “IP”) license. To do this, you must first understand the different types of license agreements. Runtime licenses are much more common across all industries. While a lot of people don`t think of it that way if you pay Netflix every month, a portion of that fee is a license to use their proprietary digital software. .