Is a License Agreement a Contract

kenty9x | February 28, 2022 | 0

In May 2018, Nestlé and Starbucks entered into a $7.15 billion coffee license agreement. Nestlé (licensee) has agreed to pay $7.15 billion in cash to Starbucks (the Licensor) for the exclusive rights to sell Starbucks products worldwide (single-serving coffee, tea, sachet beans, etc.) through Nestlé`s global distribution network. In addition, Starbucks receives royalties on packaged coffees and teas sold by Nestlé. A license agreement is a legal agreement between two parties, called the licensor and the licensee. In a typical license agreement, Licensor grants Licensee the right to manufacture and sell goods, affix a brand name or trademark, or use Licensor`s patented technology. In return, Licensee generally submits to a set of terms and conditions relating to the use of Licensor`s property and agrees to make payments called royalties. A well-written license agreement is important for licensees and licensors. If your business needs help at any point in the process, our team of contract lawyers can help. Whether it`s writing the entire agreement or reading your own template, we have the expertise to make sure it`s done right. Licensing agreements are often used for the commercialization of technologies. Licensees and licensors like to be thorough in their agreements to ensure that nothing is overlooked.

Both parties need to know what rights they have in relation to this relationship. Licensing agreements cover many factors, including the following: This article is only a general overview of licensing agreements; It is not intended to be complete and should not be used to prepare a legal document. Using a template that you find on the Internet is dangerous because it cannot meet certain laws and your own situation. Payments. As mentioned above, the licensee usually pays royalties to the licensor. There may be an initial advance on royalties, and then the current royalties are based on sales. Royalties can be paid based on a percentage of sales or a lump sum. Think about which method works best for both parties (and don`t forget about inflation and exchange rates). Licenses often include intellectual property such as trademarks, copyrights, or patents. Digital assets such as apps and brands are often licensed.

An example of a restaurant license agreement would be if a McDonald`s franchisee has a licensing agreement with McDonald`s Corporation that allows them to use the company`s branding and marketing materials. And toy manufacturers regularly sign licensing agreements with movie studios, giving them legal authority to produce figurines based on the popular similarities of movie characters. In order to avoid trade conflicts and violations, a license agreement must be written very clearly and specify the intentions of each party. A license agreement typically includes: the agreement must uniquely identify the property to be licensed (for example. B, the name of a game, character, design, brand, etc.) and, if necessary, copies of the licensed property must be attached to the agreement as exhibits. The agreement should also specify whether it covers all uses or only certain uses: for example, the licensor may grant someone the license to publish or distribute a work in some territories but not in others. Establish the property first. If you sell or purchase a license for a product, make sure that ownership of that product is clearly stated in the agreement. Also, make sure that no one else is using the asset (for example. B, a trademark) and register the trademark or submit a copyright registration. You don`t want to enter into a license agreement and then find out that someone else is questioning the ownership.

In the case of a subsidiary license, the licensee could be allowed to authorize another entity to use the licensed work. For example, if you are a movie producer and you license a song, you may still need to get permission to allow another entity to use the section of your movie where the song is played. There are many other methods to consolidate efforts to promote and sell a product or service, ranging from co-ownership of a single company to joint ventures (partnerships of two or more companies) to distribution and distribution agreements. In most cases, a license is the preferred method by a person or company that simply wants to play a completely passive role, namely receiving royalties without being involved in day-to-day or even strategic marketing decisions. As one customer put it, “I just want to sit down and cash my license checks.” However, unlike other areas of contract law, licensing law is an area of law that is heavily regulated by federal and state law. For example, copyright infringement and any other unauthorized use or appropriation of copyrighted material can result in serious criminal consequences for the accused. This may result in fines and/or possible imprisonment. License agreements describe the terms under which one party may use another party`s property.

While the properties in question may include a variety of elements, including real estate and personal effects, licensing agreements are most often used for intellectual property such as patents and trademarks, as well as copyrights for written materials and visual arts. If someone has a franchise, there may be a license agreement, and there may be several types of licenses within the franchise. For example, a McDonald`s franchise could include licenses to use the McDonald`s logo on products and packaging, and another license to manufacture its patented processes or product ingredients. Licensing your company`s assets certainly has advantages, but be sure to consider these factors when creating a license agreement: license agreements cover a variety of familiar situations. For example, a retailer may enter into an agreement with a professional sports team to develop, produce and sell goods bearing the sports team`s logo. Or a small manufacturer could license proprietary production technology to a large company to gain a competitive advantage instead of spending time and money developing its own technology. Or a greeting card company might agree with a movie distributor to produce a series of greeting cards with the image of a popular animated character. The benefits of licensing can be viewed from two angles: the licensor and the licensee. But it`s rarely that simple, because the licensee`s activities are an issue that should be of great interest to any smart licensor, as a poor or malfunctioning licensee can lead to the uselessness of a product or service that could have generated good cash flow, while other competing products dominate the field. In addition, most licensees need advice and support from the licensor, so it is inevitably not just “cashing the cheques”.

While many inventors dream of licensing their product to a multinational that simply pays a lot of money over time, the average license includes two relatively small companies that need to work together to ensure the success of the process. .