What are Licensing Agreement and Its Various Types?

  • Having an appropriate knowledge concerning licensing agreements can help you extensively in the future.

    Licensing agreement creates partnerships and lays out how the parties can enter, agree, and exit that agreement. It is a formal contract that gives an organisation or person the permission to use your property. This property can be anything – personal, real, and intellectual. However, you must know that such agreements are mostly for intellectual properties.

    What is intellectual property?

    You can call intangible goods as intellectual properties. These include trademarks and patents for technologies along with copyrights for visual art and writings.


    What does such an agreement entail?

    Typically, the contract templates for these agreements give apposite definitions of the involved parties and mention the intellectual property’s scope that is being licensed.

    The experts are also mindful to specify the different ways for the licensor to use that property while drafting this agreement. However, it is often bounded by geographic limitations or within a specific time frame.

    Additionally, that intellectual property might also incur royalty fees. This means, the owner of this property might have to pay an amount if that person uses the concerned thing in more than a specific quantity.

    Intellectual Property (IP) and its use in different spheres

    a. Real estate

    Licensing agreement can be of various types centred on different intellectual property forms regarding real estate. If you are looking to draw agreements in this field, then ensure that you use the accurate agreement after taking professional advice. It will help in building a lasting partnership. Doing otherwise can lead to the loss of a lot of money.

    b. Businesses

    You already know that intellectual properties include various elements.

    But, do you know that the property owner can include one or more of IP components while drafting licenses?

    Businesses sometimes use licensing agreements to protect as well as exploit intellectual property. When an organisation or an individual provides IP to someone else, irrespective of its form (patent, brand name, or copyright), it or he actually invests its intellectual capital. However, it remains in the control of the owner.


    Contrarily, for its licensee, contract templates in such cases give that person a way to earn from something that he/she does not hold the capacity to create. Nonetheless, the licensee has the expertise to generate revenue from it.

    When do businesses use their IPs?

    It often happens that a business has value for an intellectual asset, which is more than their sustenance. Consequently, it looks outside for partners who can adequately market its effort to generate further revenue. And, thus, they all can profit from this venture.

    Parties who need such a license

    1. Athletes and sports teams

    These professionals carry valuable trademarks like their names and logos. However, they do not have the expertise to create unique merchandises. Hence, they license those trademarks and receive royalty fees from those respective companies for using them as a brand.

    2. Actors and television performers

    For products like dolls or perfumes, many manufacturers prefer using famous actors’ names or the roles they play for their facial resemblances.


    Thus, entering a licensing agreement can help individuals protect their properties and earn money from that as well. However, it is always advisable to seek professional advice in such matters.