What Is A Licensing Agreement Product

As a licensee, you are expected to present the legal agreement ensuring that both parties are fully aware of their respective rights and obligations and beyond simply setting royalties. Good legal advice is usually required to negotiate things like: license. The license itself is described, with details on the time limits (one year?), the scope (U.S., global?) of the license, and the assertion of exclusivity. Details of what the licensee can do with the license (use, sale, sublicensing, distribution and export, etc.). The licensing agreement should contain a language dealing with the issue of property disputes. What happens, for example, if someone challenges ownership of a trademark you have licensed? Or, what happens if someone plagiarizes the copyrighted work that is licensed? Both parties to the licensing agreement should agree on how to deal with these issues. Licensing can be done by one company, but if this is not possible, an alternative is to consider a multi-step approach to your license with several component parts made by different manufacturers, final assembly by another and possibly distribution by another. This can divide the risk if the size of the project is deemed too large by a licensee. Patent licenses include the right to manufacture, sell, use, distribute and export the patented product. Most licensing agreements also deal with the issue of quality. For example, the licensee may enter into the contract conditions that require the purchaser to provide prototypes of the product, mockups of the packaging and even occasional samples for the duration of the contract.

Of course, the best form of quality control is usually achieved before the fact – by carefully checking the reputation of the licensee. Another common quality provision in licensing agreements is the method of disposing of unsold products. If stock items are sold as cheap knockoffs, this can damage the licensee`s reputation in the market. The fashion industry also has a vast history of licensing products and products. Today`s well-known designer brands, such as Ralph Lauren, Michael Kors and Vera Wang, rely on licensees to expand their product lines and offer their customers a full range of lifestyle. While Mr. Kors or Ms. Wang could create their own clothing collections of the same name, they often outsource the production of other product categories into the portfolio of a contemporary lifestyle brand. Accessories such as hats, ties and others are regularly made by licensees, as well as household products, shoes, perfumes, glasses and many others. The bargaining power of both parties to a licensing agreement often depends on the nature of the product.

For example, a film studio that would grant the image of a popular superhero to an action figure maker could have considerable bargaining power in this negotiation, as the manufacturer will likely benefit from such an agreement. The film studio therefore has the lever to take its business elsewhere if the manufacturer has cold feet. Entertainment real estate has long been a big part of the licensing industry. In 2018, Walt Disney Company was the largest licensee by sales volume. While the average consumer might expect Disney to produce all products sold under the Disney brand to retailers around the world, many of these products are manufactured by licensees.

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