To use the property of another company, you usually have to pay some kind of royalty. You might be able to pay for this in an initial lump sum or create a plan based on the sale of the property. For example, a license agreement may stipulate that the licensee must pay 1% of all sales to the licensor. If a licensee earns $10 per item, they owe the licensor 10 cents for each item sold. The benefits of licensing can be viewed from two angles: the licensor and the licensee. A License Agreement is an agreement between two parties (licensor and licensee) in which licensor establishes the licensee`s right to use the licensor`s brand name, trademark, patented technology, or ability to manufacture and sell goods. A license agreement allows intellectual property owners to allow third parties to use, modify or resell the property at a mutually agreed price without transferring ownership to the third party. There are three main categories of license agreements: License agreements define the conditions under which one party may use another party`s property. Although the properties in question may include a variety of elements, including real estate and personal property, licensing agreements are most often used for intellectual property such as patents and trademarks, as well as copyrights for written materials and visual arts. Licensing agreements cover a wide range of known situations. For example, a retailer may enter into an agreement with a professional sports team to develop, produce and sell products bearing the sports team logo. Or a small manufacturer licenses a large company`s proprietary production technology to gain a competitive advantage instead of having to spend time and money developing its own technology.
Or a greeting card company could reach an agreement with a movie distributor to produce a series of greeting cards in the image of a popular animated character. Examples of licensing can be found in many different industries. An example of a license agreement is an agreement between software copyright holders and a company that allows them to use the computer software for their day-to-day business operations. .