What is License Contract?
So, today we will be talking about the license agreement, what is the meaning of it, which all are the main parties involved in this license agreement, what are the pros and cons of license agreement and what is the importance of having license agreement in business?
A license agreement is basically a type of contract between two parties, who comes into contract with each other, where one party allows the another party a right to use the brand name, patent, trademark, or it can be the right to produce the goods and services owned by the licensor as well. Two parties are involved in this license agreement, where one is regarded as the licensor who gives the rights and other one is regarded as licensee who takes the rights from the licensor.
There are so many importance of having the license agreement, and the first and foremost is that the person gets the right to use the resources of the other one, so it saves their cost and that’s why it also benefits the licensor because he will be getting something in return which we call it as royalties. Another importance can be that the licensee can take advantage of the licensor’s skills as well which helps him to grow his business. So, these are some of the benefits which both the parties can get after having license contract with each other.
There are some pros and even cons of having this contract, and if I talk about the pros first then it gives new business opportunities to both the parties, now they have the right to use each other’s skills which help them a lot to grow. It also reduces risk for both the parties because it has now being shared by both of them.
But there are some cons as well, and the topmost is sometimes it can damage reputation of both the parties, and also create IP theft as well. In case of licensee, it creates a kind of dependency as well, because for the resources now he is being responsible.
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