You invented something, he received a positive evaluation and filed a patent. Or maybe your company doesn`t have the capital or know-how to manufacture and market its product in a global market. Inventors often prefer to license their technology rather than try to manufacture and market them themselves. Similarly, licensing may be the only practical way for a company to maximize the potential of its existing products. To be successful, a licensing agreement should benefit all parties. By acquiring rights to a patent, a licensee can: the granting of a commercial license agreement gives someone the right to use real estate or services owned by another company. The license protects a company`s exclusive rights to its intellectual property on products and allows it to make a profit by calculating to the licensee for use. A licensing agreement, often visible on the software, describes the buyer`s terms of use. In the broadest sense of the word, licensing is an important type of entry for companies considering international expansion. A licensing agreement gives a foreign company the right to manufacture and/or sell products from another company in its country. The agreement may also include production and sale in more than one country.

The taker takes the risk and invests in product production handling facilities and management facilities for other members of the supply chain in order to deliver the product and even sell it to the end consumer. The licensee usually receives a fee for each unit produced and sold. Because the licensee has little investment, this method is seen as an easier way to become an international or global company. One of the most important elements of a licensing agreement is the financial agreement. Payments made by the licensee to the licensee are usually made in the form of guaranteed minimum payments and royalties for sales. Royalties are generally between 6 and 10 per cent, depending on the ownership and the degree of experience and sophistication of the licensee. Not all licensees need guarantees, although some experts recommend that licensees receive as much compensation in advance as possible. In some cases, licensees use warranties as the basis for renewing a licence agreement. If the taker completes the minimum sales figures, the contract is renewed; Otherwise, the licensee has the option of terminating this relationship. Licensing conditions determine what the user can do with the product. The license contains prohibited uses of the product, possible modification rights and possible terms of termination of the contract. The product`s transmission and sub-licensing rights are also mentioned.

In addition, a user often has to accept warranty terms, support services and limitations on the licensee`s liability.