Those who enter into a licensing agreement should consult a lawyer, as there are complexities that are difficult for those who do not have a deep understanding of intellectual property law. As with other commercial agreements, licensing agreements begin with an in-depth definition of the licensee and the licensee participating in the agreement. This step takes on a new meaning with licensing agreements, as licensees could otherwise reuse assets granted through their subsidiaries or parent companies. Partial agreements. In the licensing agreement, as with other types of contracts, there may be sub-agreements. For example, the licensee may require a confidentiality agreement to prevent the licensee from disclosing proprietary product features or processes to others. The taker may require the donor to sign a non-compete agreement to prevent the donor from breaking the agreement by allowing another person to sell the product in the exclusive territory of the taker. Another common element of licensing agreements is the party that retains control over copyrights, patents or trademarks. Many contracts also contain a provision on territorial rights or distribution in different parts of the country or the world. In addition to the various clauses included in the licensee protection agreements, some licensees may add their own requirements. They may insist on the guarantee that the licensee owns, for example, the property`s property rights, or they may insert a clause prohibiting the licensee from directly competing with the property granted in certain markets. The licensing agreement should contain a language dealing with the issue of property disputes. What happens, for example, if someone challenges ownership of a trademark you have licensed? Or, what happens if someone plagiarizes the copyrighted work that is licensed? Both parties to the licensing agreement should agree on how to deal with these issues.
These agreements are generally time-limited, i.e. licensees retain licence fees only for a limited period of time. This may not be the case for franchises and branded products, but it will almost always be the case when it comes to advertising brand ties, musical rights and other assets for use in temporary initiatives. If an entity wishes to use the assets granted by another entity over a longer period of time, it may be preferable to enter into a strategic partnership with the licensee or to try to acquire the assets involved. Each licensing agreement is unique and these agreements vary by type (copyright, trademark, patent, etc.). In general, you will find these sections in most licensing agreements: for a company that has an excellent product but does not have the capacity to manufacture it, licensing is a great way to market this product. Entrepreneur says that, among the possible opportunities to market a product, licensing «offers the greatest potential return on investment and has the greatest chance of success.» Licensing your company`s assets certainly has advantages, but be sure to take these factors into account when creating a licensing agreement: contracts also determine which components of the asset, if any, should be refused for use by the licensee.