IP licence agreements: an overview
Intellectual property rights cover exclusive rights originating from the mental labour of their creators or inventors, and include copyright, trademarks, industrial designs, patents, geographical indications, and plant variety rights.
IP rights may be the subject of a licence, where the proprietor of an IP right (the licensor), while maintaining the ownership, authorises a third person (the licensee) to use and exploit the IP right during trade, under the terms and conditions set out by both parties.
Licensing offers the owner the valuable opportunity to expand their business into new markets, add revenue streams through royalties, develop partnerships, become recognised, and continue to decide what to do with their right—after all the licensor retains ownership.
The owner of a patent, know-how or other IP assets who is unable or unwilling to participate in all commercialisation activities (eg, technological development, manufacturing, market expansion) can benefit from licensing their IP assets, relying on their partner's capacity, know-how and management experience.
The mere consent or tolerance of the owner for a third party to use their IP right is not equivalent to a licence. Furthermore, if the proprietor of an IP right intends to sell their right to a third party, the legal route is the assignment, when there is a transfer of ownership of an IP asset from one person/entity to another person/entity.
Through a licence, it is possible to give someone permission to, for example:
