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Licensing Agreement Short Definition

December 11, 2020 | By More

Under a typical end-user licensing agreement, the user can install the software on a limited number of computers. [Citation required] From a commercial point of view, the licensee has almost all the power in a licensing agreement negotiation. This part has the mark, brand or invention that someone else wants. The licensee has control over the use of innovation. If you wish, you must accept the terms of the licensee. Because of the legal basis they have to cover, some licensing agreements are quite lengthy and documents complex. But most of these agreements cover the same fundamentals. These include the scope of the agreement, including restrictions on exclusivity or territories; financial aspects, such as necessary advances, royalties and royalty calculations; Guarantees for minimum sales Calendars with “on-the-market” dates, contract duration and renewal options; the lessor`s rights to quality monitoring and control, including procedures to follow; Minimum inventories that need to be maintained and returns and allowances. Licensing agreements cover a large number of known situations. For example, a retailer could enter into an agreement with a professional sports team for the development, manufacture and sale of goods bearing the sports team logo.

Or a small manufacturer could concede a production technology owning a larger company to gain a competitive advantage rather than investing the time and money to develop its own technology. Or a greeting card company can agree with a movie distributor to create a series of greeting cards that carry the image of a popular animated character. The consideration that the licensee will provide in return for issuing the patent license is called a licence fee. For a “paid” licence, the “flat fee” is a specified amount of money, usually due shortly after the patent comes into force (for example. B within 15 business days of coming into force), and no additional payment is required. Otherwise, the licence fee is an “ongoing licence fee” that normally must be paid annually. The annual fee may be a certain amount (for example. B $1 million per year) or an amount commensurn to the volume of the licensee`s licensed activity (e.g. B one dollar per unit of the licensed product sold by the licensee this year or one per cent of the net amount of the sale of the licensed products sold by the licensee this year).

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