In any business, an organization that grants the other party the legal rights to all its resources is known as the licensor. This can be intellectual property, finished products, or even client-based services. Having an authorized license means that a licensee can use and implement the features and avail the specific tools applied by an organization or a business entity. This means that the licensee has access to the software, data, and latest developments of an organization.
The licensing agreement is a legally binding document that binds two or more parties legally to certain sets of rules. The licensing agreement can include the ownership rights of intellectual properties, the distribution of territory sales, and so on. The rules regarding licensing agreements can contain:
Grant of trade rights
This section of an agreement explicitly mentions the rights that the licensee is entitled to and contains the usage of assets and intellectual properties of the parent company by the licensee. It also mentions the intended use of those intellectual properties. The list of all the intellectual properties and the parties involved in the trade are provided in this section.
Scope of the grant
The scope defines the boundary within which a licensee agrees to operate. If a licensee goes outside the scope, legal action could be taken by a licensor.
Territorial rights
A licensor can limit the licensee to a particular geographic location or can give the licensee free access to sell anywhere in the world. This must be mentioned in the section of the licensing agreement.
Term
Usage rights are subject to a time limit, which must be pre-defined by the licensor. Once this period expires, the agreement will cease to be valid.
Termination
The termination rules must be explicitly mentioned in a contract. These include the cases where an agreement will be terminated at once. It can happen even before the expiration of the licensing agreement. For instance, a clause could exist where it is mentioned that the agreement can be terminated if the license fee is not paid until a term is pre-defined.