An IP licence grants a third-party licensee the right to use your intellectual property in exchange for a fee or ongoing royalty payments. It is also a means of getting additional capital into your company, particularly if you are not currently using the IP or are only using it in a particular sector and/or geographical territory.
There are many reasons why a firm may wish to licence its IP, such as:
When a licencor grants permission to a licensee to manufacture or sell products, the licencor receives income for the licence without bearing the risk of manufacturing, promoting or selling the product itself.
The licence holder may commercialise the IP in order to gain additional income.
The licence holder may licence another business to sell or conduct business in a territory that the owner cannot cover.