What is an IP license agreement?
An IP licensing agreement occurs between an IP rights owner (“licensor”) and someone who is authorized to use the rights (“licensee”) in exchange for monetary value in the form of a fee or a royalty.
How do IP licenses work?
Through licensing, an IP owner grants third parties the right to use their IP, while retaining their ownership. Usually, the IP owner (the licensor) receives payment in the form of royalties for granting another person (the licensee) the right to use their IP.
What is an example of a license agreement?
An example of a licensing agreement is a contract between the copyright holders of software and another company, allowing the latter to use the computer software for their daily business operations.
Intellectual property (IP) licences allow individuals or businesses to use another's IP rights in exchange for a fee. The person or company granting the licence is the licensor, and the person receiving the licence is the licensee.
A license agreement is a business contract between two parties. The licensor (the seller of the license) owns the asset being licensed and the licensee (the buyer) pays for the right to use the license. The licensee pays the owner in exchange for the right to sell the product or use the technology.
Although rates ranging from 3% to 8% of net sales are common, each licensing agreement is unique and the only consensus that matters with respect to royalty rates is the one that occurs between the licensor and the licensee as a result of negotiations.