Licensing is one of many form of means to commercialize an intangible asset namely Intellectual Property. Like all tangible assets such as houses which can be sold, leased or rented out to another, Intellectual Property can also be licensed to another if “selling” is not your intention.
How does it work?
It is based on a contractual agreement between the owner of the property (the LICENSOR) and the person who intends to acquire the license (the LICENSEE). A license agreement is a contract under which the LICENSOR grants permission for the use of its intellectual property to the LICENSEE, within the limits set by the provisions of the contract. Without such an agreement, the use of the intellectual property would be an infringement.
Content of License Agreement
Similar to a Tenancy Agreement whereby the Tenant should abide to certain terms and condition set by the Landlord. A License Agreement grants the LICENSEEpermission to use the property subject to specific terms and conditions which may include the purpose of use, a defined territory and a defined time period. In exchange for this usage, the LICENSOR receives financial remuneration – normally in the form of a guaranteed fee and/or royalty on a percentage of sales.
Types of License
Three types of License
- Exclusive License – licensor may not use the IP;
- Non-Exclusive – licensor may use the IP and grant other licenses; or
- Sole – licensor may use the IP but will not grant other licenses
Advantages of Licensing
The main advantage for Licensing an IP is to exploit an IP to its full potential and to:
- Promote brand awareness amongst retailers or distribution channel within the relevant industries.
- Creating further brand awareness to support its core products or services.
- Supporting and enhancing its core values by associations with the licensed products.
- Entering new markets (consumer or geographical) which were unfeasible with its own resources or capabilities.
- Generating new revenue streams, often with little involvement or additional financial or other resources implication.
What can we provide?
- Advisory to Licensor and Licensee the basic knowledge about licensing.
- Preparing and drafting of the Licensing Agreement upon conclusion and finalisation of terms between the Licensor and Licensee.
- Stamping services, if required, in relation to the License Agreement.