Pros And Cons Of Licensing Agreements

When a licensing agreement is signed, the taker assumes the full risk in the agreement. They depend on the quality of the intellectual property that is used to make their own profits. If they do a great job and make a lot of money, the licensee can apply for an extension that costs more than the original license. There is also no guarantee of exclusivity with many licenses, which means that several companies could compete in the same market using the same tools and products to generate revenue. A licensed person or company could take the following steps: One of the main problems faced by licensees is the licensee`s refusal to validate the licence declarations. You should not allow yourself to verify your accuracy. This allows you, as a licensee, to take legal action, but it tends to become very expensive, very quickly. This is why arbitration clauses become a common element of licensing agreements. Some even require ongoing licensing audits as a condition for the continuation of the licence. Do you need a custom Ip licensing solution? our IP rights specialist for a free consultation today.

There is no guarantee that a licensing agreement will generate cash. You could give a certain royalty to a licensee and never see anything, because the taker cannot generate sales. Many products are also not licensed, even if they are offered at discounted prices because there is no interest in the product. As a licensee, you may also be faced with returns of damaged goods, which also reduces your total earnings. A company looking for products available for brand license can consult different sources for information on its availability. These include the fact that the licensing agreement allowed Starbucks to promote brand awareness outside of its North American operations through Nestlé`s distribution networks. For Nestlé, the company has accessed Starbucks products and a strong brand image. The value of the brand can be positive or. – What are the main elements of a licensing agreement? What are the main issues to consider when negotiating a licensing agreement? The licensee also has the advantage of potentially increasing his own profits beyond the amount he might otherwise have appreciated.