When Is a Licensing Agreement Used

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Exclusivity and territory. The licensee is granted the exclusive right to manufacture and sell the product in a specific territory. Licensor agrees not to allow anyone to sell the Product in this territory. This part of the agreement is usually associated with a term. In May 2018, Nestlé and Starbucks entered into a $7.15 billion coffee license agreement. Nestlé (licensee) has agreed to pay $7.15 billion in cash to Starbucks (the Licensor) for the exclusive rights to sell Starbucks products (single-serving coffee, tea, bean bags, etc.) worldwide through Nestlé`s global distribution network. In addition, Starbucks receives royalties on packaged coffees and teas sold by Nestlé. The licensing agreement gave Starbucks the opportunity to increase brand awareness outside of its North American operations through Nestlé`s distribution channels. For Nestlé, the company had access to Starbucks products and a strong brand image Brand equityIn marketing, brand equity refers to the value of a brand and is determined by the consumer`s perception of the brand. Brand equity can be positive or. 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. Knowing how to obtain a license agreement can be very useful if you want to allow other parties to use your intellectual property (IP) for merchandising purposes or for purely production-related purposes.3 min read The tenant or licensee has limited rights to a real estate license agreement because a license is “revocable” according to the licensor`s will. A license agreement is a commercial agreement between two parties. The licensor (the seller of the license) owns the assets to be licensed and the licensee (the buyer) pays for the right to use the license. Licensee shall pay royalties to the Owner in exchange for the right to sell the Product or use the Technology. Start and end of the agreement. Explain when the agreement is effective and when it ends. Describe the possibility of renegotiating and continuing the agreement at the end of the term. Specify the circumstances in which the agreement could end before the expiry of the term. What ultimately happens with ownership of the product (usually it is returned to the owner)? In addition to the basics of a license agreement, there are a number of steps you can take to further strengthen your position. These include: Copyright license agreements are often used for consumer goods, as are trademark licenses.

They are also used for prizes, such as musical works or movies. There are also two different types of license terms. Trade secret licensing agreements are often associated with non-disclosure agreements (or NDAs). Non-disclosure agreements stipulate that the party receiving certain confidential information cannot share it with anyone. Runtime licenses are much more common across all industries. While many people don`t think so much about paying Netflix every month, part of that fee is a license to use their proprietary digital software. For a company that has a great product but has no way to make it, licensing is a great way to bring that product to market. The entrepreneur says that among the potential ways to commercialize a product, licensing “offers the greatest potential return on investment and has the greatest chance of success.” Sub-agreements. In the license agreement, as with other types of contracts, there may be sub-agreements. For example, Licensor may require a non-disclosure agreement to prevent Licensee from disclosing proprietary product features or processes to third parties.

Licensee may require Licensor to sign a non-compete clause to prevent Licensor from breaching the Agreement by allowing someone else to sell the Product in Licensee`s exclusive territory. License agreements set out the terms under which one party may use another party`s property. While the properties in question may include a variety of elements, including real estate and personal effects, licensing agreements are most often used for intellectual property such as patents and trademarks, as well as copyrights for written materials and visual arts. Do 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. .