Why Should A Firm Be Cautious About Entering Licensing Agreement

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However, given how these agreements should be beneficial to both parties, both sides should be prepared to compromise. The trick is to know when you give in and when you stick to weapons. For all legal issues related to commercial contracts, you can always easily contact one or more contract lawyers to discuss your situation on UpCounsel for free. In the early 2000s, a growing number of technology companies began implementing IP licensing programs to turn dormant projects into revenue, open new markets and evaluate potential business partners. These companies carried out inventories of their knowledge bases and patent families and identified technologies that were not at the heart of their business but nevertheless offered some potential for development. They then tried to license these technologies to other companies. In the Licensing Journal, George A. Frank stated: “Patents received by some companies for reasons not directly related to technology development or transfer have proven to be a huge unused resource. IP licensing has become a huge source of revenue and is not an important measure of a company`s success” (2004). IBM, for example, earns more than $1 billion a year through its IP licensing program. First, licensing agreements differ from franchises.

Although they have the same characteristics (as in, a universal brand, parent companies and the under-licensed), they operate in different ways and are subject to different federal and regional rules. In economics, licensing agreements or agreements are beneficial to both parties. The licensee provides ownership and the taker brings specialized knowledge in the sector or territory covered by the licence. The resulting relationship is similar to a joint venture or partnership. Licensing agreements include various types, including copyright licensing, patent licensing, product licensing, brand licensing and software licensing. In a typical licensing agreement, the licensee undertakes to make intellectual property rights such as technology, brand name or licensee know-how available to the licensee. In exchange for the intellectual property of the licensee, the purchaser usually plays the donor a pre-feeding and/or a licence fee. A licence fee is an ongoing fee paid for the licensee`s right to use intellectual property.


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