What is an IP licensing agreement?

An IP licensing agreement occurs between an IP rights owner (“licensor”) and someone who is authorised to use the rights (“licensee”) in exchange for monetary value in the form of a fee or a royalty. The two parties agree on the terms and conditions via negotiation, with the outcome dependent upon the bargaining power of each side. The licensor is always the owner of the licensed IP, and one licence can cover patent and design rights, related know-how and a trade mark. The agreement between the two parties can allow the licensor to tap into the licensee’s productive capacity and relevant local expertise, thus increasing the licensor’s overall knowledge.

An IP licence may also provide your company with the ability to get its products or services to a market or geographical territory in less time, allow risks to be shared, revenue to be generated, lead to an increase in market penetration, a reduction in costs and time, access to expertise, competitive advantage, collaboration and the opportunity to minimise capital investment.

What can be subject to an IP licensing agreement?

IP that can be licensed includes:

  • Trade marks for branding of products and services
  • Patents for technology (goods and processes)
  • Registered product designs
  • Copyright for literature or artistic work
  • Confidential information that keeps IP secure