Frequently Asked Questions

What is a licensing agreement and what does it entail?

A licensing agreement, also known as a license agreement, is a legal contract between two parties that permits one party to utilize the intellectual property of the other. This intellectual property could be a patent, trademark, or copyright. The party granted permission usually pays for this privilege, either upfront or through ongoing royalty payments based on a percentage of sales. The licensing agreement can be exclusive, limited exclusive, or non-exclusive, but all types typically include common elements. These include the length of the contract, roles and responsibilities of each party, geographic areas of interest, the term of the license, financial details, quality control standards, and conflict resolution language. In an exclusive licensing agreement, the parameters of the exclusive rights need to be clearly defined. These rights could be exclusive for a specific geographic area or for certain industries in the case of a manufacturing process or software. The rights could be entirely exclusive or co-exclusive, where the licensor retains the right to use the property as they wish.