Facts about the Licensing Agreement template

Contents

What is a Licensing Agreement?

A licensing agreement lets a licensee use intellectual property. Intellectual property (IP) is any work that is not material, such as a copyright, patent, trade secret, design, geographical indication, or trademark. A licensing agreement can be exclusive or non-exclusive. An exclusive license grants the licensee the exclusive right to use the IP for a specified period of time. Non-exclusive agreements let licensees use the IP, but the licensor retains control of the IP. Sole licenses are used when the licensor wants to grant a licensee exclusive rights but still retain the right to use the IP. Licensing agreements can also be known as a trade secret license agreement, patent license agreement, trademark licensing agreement, intellectual property license agreement, and other names.

The agreement itself describes the licensed material and how it can be used. It must also specify the type of fee. There is almost always an issuance fee paid upfront or over time. Other fees include royalty and milestone payments, as well as renewal fees. Licensing agreements may also contain stipulations about the IP such as what information is confidential and what standards of quality the licensee must meet. The most recent licensing agreement is the valid one, even if it contradicts prior agreements.

What is a Licensing Agreement used for?

Licensing agreements are commonly used by authors to allow screen or video game adaptions of their stories. Owners of slogans, designs, or photographs can also use them to make a profit from their creations. Another real-life example is a patent holder licensing the use of a part she designed to a company that wants to use it in mass production. Software companies also use a derivative of a licensing agreement called an End User License Agreement or EULA to limit the ways in which users can utilize their programs. Licensing agreements allow individuals and entities to make money on otherwise intangible assets.

Why should you use a Licensing Agreement?

Anyone who wishes to protect an intellectual property should use a licensing agreement. It is very difficult to make money without one, and there can be large financial and emotional consequences for not using one. If another individual or company uses an intellectual property without an agreement with the owner, they risk litigation and irreparable harm to their reputation. The owner of the IP can also incur large costs in the form of legal fees and public scrutiny of the decision to sue. It can be particularly embarrassing if the owner of the IP loses the suit. In this way, licensing agreements not only protect profits but also the licensor’s control over the intellectual property.

How to write a Licensing Agreement?

Licensing agreements usually include the same common elements. Additional elements will be related to the type of intellectual property and the goals of the licensee and licensor. Licensing agreements can also vary by state. The most commonly included parts are listed below.

  • Detailed information of the licensee and licensor
  • Definition of the intellectual property
  • Payment type and amount
  • Duration of the license
  • How the intellectual property can be used
  • Definition of the agreement’s exclusivity
  • Regional restrictions on the use of the intellectual property
  • Confidentiality of the agreement and its terms
  • Specification of who owns the intellectual property
  • Disclaimer about the licensor’s responsibility for the licensee’s potential losses
  • Warranties and guarantees about the intellectual property
  • Stipulations prohibiting the licensee from granting sub-licenses
  • Definition of liability limitations
  • In order to determine the specific elements needed for an agreement, it is recommended that you ask an attorney. However it does not hurt to research what you will need to protect your intellectual property. The information needed for most IPs can be obtained by looking up which category the IP falls under. When in doubt, remember that all licensing agreements should answer the who, what, when, where and how of the intellectual property’s utilization by the licensee.

How to fill out a Licensing Agreement with PDFSimpli in five steps?

  • 1: Prepare

    Before you start writing the agreement make sure you have all the necessary information. Double check that the information for the licensee and licensor is accurate and spelled properly. It is also important to ensure that both parties have agreed to the terms and are ready to sign. It would be unfortunate to write the document with inaccurate information and then have to scrap it.

  • 2: Choose the Right Software

    Software can make the process smooth or frustrating, depending on its quality. Good software should be easy to use and get out of your way so that you can focus on the important details. This is especially important for legal software, as the smallest mistake on a legal document can cause big problems. PDFSimpli is an example of good legal software. Our templates are professionally designed to help guide you through the process of creating a functional and aesthetically pleasing document.

  • 3: Fill Out or Edit

    Once you have chosen a template, it is time to fill it out with the necessary details. PDFSimpli highlights the places that need to be filled out so you can jump through and input the information. You can also select, delete and rearrange the document according to your specifications.

  • 4: Review

    It might be tempting to jump right to printing, but every writer makes mistakes. Double check the document for any errors that spell check might have missed. These can include grammatical errors as well as misspellings of names and other details. One of the best ways to catch typos is with a second set of eyes or by reading it aloud. It can also help to read the document backwards.

  • 5: Save, Download, Print or Send for Signature

    When you have double checked and triple checked the document, you can finalize it. PDFSimpli has flexible options. You can save it, download it for printing or even send it for eSigning. Consider keeping a back up in case the original is lost or destroyed.

Licensing Agreement frequently asked questions:

Copyrights protect movies, songs, pieces of art and books. Anything protected by a copyright can be licensed. Unlike licensing agreements, copyrights protect the work of the owner as long as seventy years after their death. A patent is like a copyright, but it protects new inventions for periods of time lasting anywhere from fourteen to twenty years. Trademarks protect designs and words associated with brands and logos. They last for as long as the owner needs them.

How you negotiate a licensing agreement depends on the type of intellectual property and the context within which you are negotiating. The author of a bestselling series will have a stronger position than one with less sales. If the licensee is very likely to profit, the licensor has a much stronger position because the licensor can offer a deal to someone else. This is why negotiations between toy companies and popular movie franchises can be so competitive.

If a party violates the agreement then the agreement is considered void. The guilty party may also be responsible for damages. If one party suspects another of wrongdoing they can sue them. Lawsuits can start either from breech of contract or missed royalty payments. In the case of royalties, small differences in percentages can add up to staggering amounts. Companies have been sued for millions of dollars over missed royalty payments and violations of licensing agreements.

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