Definition

A licensing agreement allows another party to use the brand, patent or trademark owned by another party. The agreement between the property owner, known as the licensor, and the permitted party, known as the licensee, will contain terms detailing the licensor’s type of licensing agreement, usage, and compensation. These contracts will vary depending on what exactly is being licensed. Licensing agreements hold much commercial utility due to their ability to alleviate disputes arising from sales, quality, and royalties.

Essential Characteristics

Licensing agreements will specify terms under which the licensee can utilise the intellectual property of the licensee. Therefore, licensing agreements need to delineate, with a high level of granularity and specificity, how the parties may use them within the following considerations:

• The geographic region where the property may be utilised
• The length of the licence
• Exclusivity or non-exclusivity of a given licensing arrangement
• Scaling terms and whether new royalty fees may be incurred