The term “Licensing” is an agreement that authorizes a person or business (licensee) to use in a specified manner intellectual property or a patented invention that is owned by another person or business (licensor).

Licensing and protecting inventions

Licensing can also apply to copyright protected works, such as a play being performed by a theatre group. Trademarks can also be licensed, and the licensor may use the trademark as defined by the licensing agreement.

Use and restrictions of use are defined in the licensing agreement. For instance, a software company may allow the use of their software product in a licensing agreement, but restrict the copying and distribution of the licensed software.

The elements usually present in a licensing agreement include: nature of use (manufacture, role, use), term, territory and renewal provisions.

  • Use describes the scope of use permitted.
  • Term describes the length of the agreement. This protects both parties and ensures that the license does not extend past the term of intellectual property ownership.
  • Territory defines the territories in which the licensing rights apply to. If a license stipulates that the license is limited to “North America” then the licensee would not have rights to use the product in Europe.
  • Renewal provisions describe how a license can be renewed.
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