What Is The Function Of Licensing Agreement

Ip licensing plays an important role in business, science and broadcasting. Business practices such as franchising, technology transfer, character editing and merchandising depend entirely on intellectual property licensing. Land licenses (exclusive licenses) and intellectual property licenses are sub-branches of law that arise from the interaction of general contract laws and specific legal principles and laws relating to these respective assets. The bargaining power of both parties to a licensing agreement often depends on the type of product. For example, a film studio that licenses the likeness of a popular superhero to an action figure creator could have significant bargaining power in this negotiation, as the manufacturer is likely to benefit enormously from such an agreement. The film studio thus has the leverage to relocate its activity elsewhere if the manufacturer is cold on its feet. An example of a restaurant license agreement would be if a McDonald`s franchisee has a licensing agreement with McDonald`s Corporation that allows them to use the company`s brand and marketing materials. And toy manufacturers regularly sign licensing agreements with movie studios, giving them legal authority to produce figurines based on the popular similarities of movie characters. Under a typical End User License Agreement, the User may install the Software on a limited number of computers. [Citation required] Patent licenses have been studied in formal economic models in the field of industrial organization. In particular, Katz and Shapiro (1986) investigated the optimal licensing strategy of a research lab that sells products to competing companies in the market.

[15] It turns out that (compared to the welfare maximisation solution) the licensor`s incentives to develop innovations may be excessive, while the licensor`s incentives to disseminate the innovation are generally too weak. As a result, the revolutionary work of Katz and Shapiro (1986) was expanded in several directions. For example, Bhattacharya, Glazer and Sappington (1992) have taken into account that companies acquiring licences will have to make further investments in order to develop marketable products. [16] Schmitz (2002, 2007) has shown that asymmetric information due to adverse selection or moral risks can cause the research laboratory to sell more licenses than with complete information. [17] [18] Antelo and Sampayo (2017) investigated the optimal number of licenses in a signaling model. [19] This article is only a general overview of licensing agreements; It should not be complete and should not be used to create a legally advantageous document. Using a template that you find on the Internet is dangerous because it cannot meet certain laws and your own situation. A license agreement is a commercial agreement between two parties. The licensor (the seller of the license) owns the asset 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. Licensing agreements cover a wide range of known situations. For example, a retailer could enter into an agreement with a professional sports team to develop, produce and sell products bearing the sports team`s logo.