What Is The Meaning Of Licensing Agreement

April 15, 2021

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. The film studio therefore has the lever to take its business elsewhere if the manufacturer has cold feet. Patent licenses have been studied in formal business models in the field of industrial organization. In particular, Katz and Shapiro (1986) studied the optimal licensing strategy of a research laboratory sold to competing companies in the product market. [15] It appears that the licensee`s incentives to develop innovation may be exaggerated (compared to the social protection solution), while the licensee`s incentives to disseminate innovation are generally too low. Subsequently, the pioneering work of Katz and Shapiro (1986) was extended in several directions. For example, Bhattacharya, Glazer and Sappington (1992) have taken into account the fact that licensed companies need to invest more to develop marketable products. [16] Schmitz (2002, 2007) has shown that due to negative selection or moral risk, asymmetric information can lead the research laboratory to sell more licenses than would be the case for complete information. [17] [18] Antelo and Sampayo (2017) studied the optimal number of licenses in a signalling model. [19] Licensing agreements define the conditions under which one party may use the property of another party.

While the real estate concerned may include a large number of properties, including real estate and personal property, licensing agreements are most used for intellectual property, such as patents and trademarks, as well as copyrights for written material and visual arts. Confidentiality agreement. Both parties agree not to disclose trade secrets. Area: A license can determine the area affected by the rights. For example, a licence with an area limited to “North America” (Mexico/U.S./Canada) would not provide protection to a licensee against any action for use in Japan.