Licensing is cost-effective because the financial burden of product development is shared. It is also a lower risk for the buying company, as it can do business based on promising preclinical or clinical results. Compare that to the traditional drug discovery process, where a company launches a project and invests heavily in its development – all with little data to refrain from any expectations. All this means that licensing can be very attractive to both pharmaceutical companies and investors. But, as I said above, it can also create confusion – confusion that can lead to ill-informed decisions on the part of investors. If a party has a license, it wants to make sure it is used in the right way. This part of the agreement describes how the policyholder is ensuring it. This may include regular quality assurance checks or the donor`s right to track sales. An example of a very common property contained in licensing agreements is the image of a cinematic superhero. Toy manufacturers will often allow it to sell action characters that are much more likely to be purchased if they are based on a popular superhero. Another common example is the licensing of a song for an advertising campaign or for use in a movie. In the fast food market, there are a number of franchise-based businesses, where a franchisee holds the rights to the name, products and promotional material of the main company. Licensing your company`s assets certainly has advantages, but be sure to consider these factors when creating a licensing agreement: a licensing agreement is a commercial contract between two parties.
The licensee (the licensee) owns the licensed assets and the buyer pays the right to use the license. The licensee pays royalties to the owner in exchange for the right to sell the product or use the technology. A licensing agreement is a legal contract between two parties, the licensee and the licensee. In a typical licensing agreement, the donor grants the purchaser the right to manufacture and sell products, apply a brand name or trademark, or use the licensee`s patented technology. In return, the taker generally submits to a number of conditions relating to the use of the licensee`s property and undertakes to publicize the payments in the form of royalties. Pay attention to definitions. Make sure the product or process is completely and clearly described so that there is no misunderstanding about what is allowed. Licensing agreements guarantee that you have legal permission to use the assets of another person or company. For example, if you used an artist`s song in an advertisement, you would have to sign a licensing agreement to do so legally.
If you use the song without permission, you may violate copyright laws and risk being sued or fined. The final licensing agreement should accurately reflect the terms of sale agreed by the parties, with assurances, guarantees, agreements and appropriate conditions to take into account the results of diligence and the distribution of risks between the parties. The bargaining power of both parties to a licensing agreement often depends on the nature of the product. For example, a film studio that would grant the image of a popular superhero to an action figure maker could have considerable bargaining power in this negotiation, as the manufacturer will likely benefit from such an agreement.