Jump to Section
What Is a Licensing Agreement?
A licensing agreement is a written contract that gives you permission to use another party's property under a certain set of conditions. The two parties involved in this agreement are the licensor (the one allowing permission) and a licensee (the one gaining permission).
What Is the Purpose of a Licensing Agreement?
Licensing agreements ensure that you have legal permission to use another person's or business's property. For instance, if you were to use an artist's song in a commercial, you would need to sign a licensing agreement to legally do so. If you were to go ahead and use the song without permission, you may infringe on copyright laws and risk being sued or fined.
You most commonly see licensing agreements for intellectual property, such as patents, trademarks, and copyrighted materials. Common copyrighted materials include music, film, video, and artwork. While a licensing agreement doesn't give you ownership over another entity's property, it does allow you to use it as long as you are following the parameters the agreement outlines.
How Licensing Agreements Work
In order to use another entity's property, you normally have to pay some kind of royalty. You may be able to pay this in an upfront lump sum or come up with a plan to pay based on the sales of the property. For instance, one royalty agreement may say that the licensee has to pay 1% of all sales to the licensor. If a licensee makes $10 per item, then they owe the licensor 10 cents for each item sold.
Specific Types of Licensing Agreements
Lets's break down some common types of licensing agreements:
- Trade secret licenses: Outlines how, where, and when you can use an entity's trade secrets.
- Trademark licenses: Outlines how you may use a trademark.
- Patent licenses: Outlines your right to sell, use, make, distribute, and export a product that's patented.
- Copyright licenses: Outlines your right to reproduce and sell a copyrighted asset.
Examples of Licensing Agreements
There are many uses for licensing agreements. A common one is for the commercialization of technologies, for example, if your small business wanted to use software in your business operations. The software company may require you to sign a licensing agreement in order to use its software. Another example is when franchises have licensing agreements with the headquarters of a restaurant. The licensing allows the franchisee to use the company's branding and marketing materials.
What Does a Licensing Agreement Cover?
Both licensees and licensors like to be thorough in their agreements to ensure nothing is overlooked. Both parties need to know what rights they have regarding this relationship. Licensing agreements cover many factors, including the following:
- Payment This section outlines how the licensee will pay the licensor for use of their property. As stated before, there are many different ways to negotiate royalties. When deciding which method is ideal for both parties, you must consider exchange rates and inflation.
- Intellectual Property Rights This section outlines the responsibility to protect intellectual property and who bears the cost.
- Exclusivity This section restricts when and where the licensor can sell their property. It makes it so the licensee can be the only entity selling this product or service in a set territory. For example, when Apple introduced the iPhone in 2007, it entered into an exclusive agreement with AT&T which only allowed AT&T exclusivity to sell the iPhone in the US market.
- Subsidiary Licensing With subsidiary licensing, the licensee could be granted permission to allow another entity to use the licensed work. For instance, if you're a film producer and license a song, you could still need permission to allow another entity to use the section of your film where the song is playing.
- Quality Assurance When a party licenses something, they want to ensure it's being used in the right way. This section of the agreement describes how the licensee will ensure that this happens. This may include periodic quality assurance checks or giving the licensor the right to monitor sales.
- Additional Clauses These are anything else the two parties want to add. For instance, some licensing agreements include non-disclosure agreements within them. This clause would prevent the licensee from disclosing any proprietary information or processes.
See Licensing Agreement Pricing by State
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Factors to Consider When Creating a Licensing Agreement
In order to protect yourself and your business, it's important to be thorough when creating a licensing agreement. Both the licensee and the licensor need to fully understand what they are agreeing to. Consider the following advice before you get started:
- Meet with a contract lawyer They have the expertise to help you create a fair licensing agreement that works in your interest. Likewise, they know the formatting and legal terminology to ensure that the document holds up in court if necessary.
- Establish your ownership Before licensing anything, make sure you have the appropriate ownership of it. For instance, if you have a trademark, make sure it is registered. Another thing to check is that no one else is already using the asset and trying to claim ownership over it.
- Be ready for ownership disputes Make sure your contract includes what would happen if someone were to dispute your ownership. For instance, what if someone claims that they have copyright over something that you feel you have the right to license? Likewise, you need to know what course of action to take if someone were to plagiarize work that's under this license.
- Understand what is stated If you are unsure of any part of the contract, make sure you ask. It's important that each line makes sense, so you fully know what you are agreeing to.
- Discuss royalties right away Ultimately, payment is at the center of virtually all licensing agreements. Make sure to discuss how royalties are being paid in different situations that may arise. For instance, if you have a percentage royalty, discuss what would happen if the licensee failed to make the projected sales.
- Be mindful of government regulations How a licensing agreement operates isn't solely up to the parties involved. You also need to follow relevant legislation that may vary based on what you are licensing.
- Think about how taxes will work When paying royalties, you may be able to claim them as a business expense on your taxes. Meet with your tax professional to learn how to properly report these expenses.
- Research the other party Before getting into a licensing agreement, learn more about the other party. Get to know how the public views them before associating your business with them. Likewise, check to see how they operate. Visiting their office and seeing their processes up close are all parts of protecting your own business.
- Think about every possible situation What if a licensee won't pay? What if they go bankrupt? What if the licensor wants to transfer ownership to another party? Being prepared for any scenarios can help the agreement go smoothly.
Having a well-written licensing agreement is important for both licensees and licensors. It is always recommended to consult legal counsel for these matters so that you can work with a professional that specializes in licensing. If your business needs help at any point throughout the process, our team of contract lawyers can help. Whether it be drafting up the entire agreement or reading over your own template, we have the expertise to make sure it's done right.
Meet some of our Licensing Agreement Lawyers
Ralph S.
Ralph graduated from University of Florida with his JD as well as an LLM in Comparative Law. He has a Master's in Law from Warsaw University , Poland (summa cum laude) and holds a diploma in English and European Law from Cambridge Board of Continuous Education. Ralph concentrates on business entity formation, both for profit and non profit and was trained in legal drafting. In his practice he primarily assists small to medium sized startups and writes tailor made contracts as he runs one of Florida disability non profits at the same time. T l Licensed. in Florida Massachusetts and Washington DC this attorney speaks Polish.
Bryan B.
Experienced attorney and tax analyst with a history of working in the government and private industry. Skilled in Public Speaking, Contract Law, Corporate Governance, and Contract Negotiation. Strong professional graduate from Penn State Law.
Karen S.
I'm an attorney available to help small businesses in Georgia get started with initial business set-up, required filings, tax strategies, etc. I'm also available to draft, review, and negotiate contracts. I can draft and file real estate quit claims as well. My experience areas include small business startups, information technology, technology innovation, real estate transactions, taxes, community associations, intellectual property, electrical engineering, the business of video game development, higher education, business requirements definition, technology consulting, program management, and the electric utility industry. I work part-time for a local law firm and part-time in my solo practice. I'm also an adjunct professor at Southern New Hampshire University teaching business innovation and business law. In addition, I'm part owner, legal counsel to, and a board member of a virtual reality video game development company. I am a member of the Georgia Bar Association. Please reach out if you need attorney, documentation or consulting help in any of those areas!
Fabian G.
Fabian graduated with honors from the University of Miami School of law, where he served as the articles and comments editor for the law school's Race and Social Justice Law Review. He received the John F. Evans Memorial Scholarship Award for excellence in the university's Litigation Skills Program and the HOPE Pro Bono award for completing more than one hundred (100) pro bono hours. Additionally, he received the CALI Excellence for the future award in Sports Law. He focuses his practice on corporate, real estate and immigration matters. Fabian has experience representing luxury hotel owners and operators in connection with the drafting of hotel management agreements, restaurant license agreements, and complex restaurant leases for domestic and international projects including: Nobu Tulum, Nobu Punta Cana, Nobu Orlando, Nobu Chicago and the Nickelodeon Hotel in Riviera Maya, Mexico, among others. He has represented clients in the commercial real estate industry in connection with the drafting of purchase and sale agreements, promissory notes, and mortgages. Lastly, Fabian routinely counsels corporate clients in connection with the drafting of articles of organization, operating agreements, and other documents related to acquisitions, restructurings and investments.
May 9, 2023
Venus C.
Venus Caruso is a Florida-based attorney who has been helping companies and individuals with their contract needs for over 19 years. She leverages her 10 years spent as a complex commercial litigator and 7 years spent as in-house legal counsel to help clients with their contract needs, whether it’s preparing a contract or providing feedback and redlining. Some types of contracts that Venus can help you with include NDAs, digital agency agreements, marketing agreements, employment agreements, Florida LLC operating agreements, software development agreements, non-competition and non-solicitation agreements, non-circumvention agreements, sales rep agreements, software agreements, SaaS agreements, contract amendments, and termination of contract agreements.
May 22, 2023
Erik W.
Erik J. Washington completed his undergraduate studies at Florida A&M University, where he earned his Bachelor of Science degree in Business Administration with a concentration in Finance. Mr. Washington went on to earn his Juris Doctor from Florida A&M University College of Law. Upon receiving his J.D., Mr. Washington was admitted to The Florida Bar and the United States District Court, Middle District of Florida. Mr. Washington started his legal career by working with a boutique Orlando law firm where his practice concentrated on family law, bankruptcy, helping clients with estate planning and probate matters, and advising homeowner’s association boards on proper administration. After that experience Mr. Washington later joined another mid-size Orlando law firm where he would eventually become the Managing Consumer Bankruptcy Attorney where he oversaw the filing and administration of hundreds of chapter 7 and chapter 13 cases. Prior to starting the Washington Law Firm, Mr. Washington was an associate at a Central Florida Bankruptcy law firm working under the tutu ledge of a highly respected bankruptcy attorney with over 20 years of bankruptcy experience. Mr. Washington has learned that bankruptcy is a tool designed that not only benefits a person in debt but is also good for the economy as a whole. It is because this new beginning and fresh start that it becomes a means of not only helping a person in debt, but it gives that person once in debt the chance to reestablish good credit and yet again borrow money to spend. Mr. Washington focuses on consumer bankruptcy, real estate, probate, and auto accidents.
May 22, 2023
Christopher M.
Skilled and experienced business attorney with vast experience in a wide array of commercial contracts. Strong emphasis on the lodging and hospitality practice field, including real estate acquisition and disposition, management agreements, franchise agreements, design & construction contracting and finance.
Find the best lawyer for your project
Browse Lawyers NowNeed help with a Licensing Agreement?
Intellectual Property lawyers by top cities
- Austin Intellectual Property Lawyers
- Boston Intellectual Property Lawyers
- Chicago Intellectual Property Lawyers
- Dallas Intellectual Property Lawyers
- Denver Intellectual Property Lawyers
- Houston Intellectual Property Lawyers
- Los Angeles Intellectual Property Lawyers
- New York Intellectual Property Lawyers
- Phoenix Intellectual Property Lawyers
- San Diego Intellectual Property Lawyers
- Tampa Intellectual Property Lawyers
Licensing Agreement lawyers by city
- Austin Licensing Agreement Lawyers
- Boston Licensing Agreement Lawyers
- Chicago Licensing Agreement Lawyers
- Dallas Licensing Agreement Lawyers
- Denver Licensing Agreement Lawyers
- Houston Licensing Agreement Lawyers
- Los Angeles Licensing Agreement Lawyers
- New York Licensing Agreement Lawyers
- Phoenix Licensing Agreement Lawyers
- San Diego Licensing Agreement Lawyers
- Tampa Licensing Agreement Lawyers
ContractsCounsel User
Licensing Agreement
Location: Colorado
Turnaround: Over a week
Service: Contract Review
Doc Type: Licensing Agreement
Page Count: 3
Number of Bids: 3
Bid Range: $700 - $1,800
ContractsCounsel User
Data Agreement
Location: Texas
Turnaround: Over a week
Service: Drafting
Doc Type: Licensing Agreement
Number of Bids: 5
Bid Range: $700 - $1,250
User Feedback:
related contracts
- Accounts Receivable Purchase Contract
- Affiliate Agreement
- Bill of Sale
- Boat Purchase Agreement
- Brand Ambassador Contract
- Building Lease
- Business Partnership
- Business Partnership Agreement
- Business Proposal
- Collaboration Agreement
other helpful articles
- How much does it cost to draft a contract?
- Do Contract Lawyers Use Templates?
- How do Contract Lawyers charge?
- Business Contract Lawyers: How Can They Help?
- What to look for when hiring a lawyer