How does a product licensing agreement work?

The licensor owns the rights to certain intellectual property (IP) while the licensee manufactures products using the IP granted by the licensor via a license agreement. Once the rights have been secured, the licensee manufactures product using the licensed IP, and in return pays the licensor a royalty for its use.

What is a licensing agreement in marketing?

A licensing agreement is a legal contract between two parties, known as the licensor and the licensee. In a typical licensing agreement, the licensor grants the licensee the right to produce and sell goods, apply a brand name or trademark, or use patented technology owned by the licensor.

What is a manufacturing license agreement?

A manufacture license agreement is a crucial document that you need for your business. An MLA is a contract between the manufacturer and inventor. Such a contract creates an agreement between two individuals, the licensor and licensee, where a licensor bestows a copyrighted license to the licensee.

What is a typical royalty percentage?

Royalty rates vary per industry, but a good rule of thumb is between 2-3% on the low end, and 7-10% on the high end. I have licensed consumer products for as low as 3% and as high as 7%, with 5% being the most common and a generally fair number.

How do I license my product to a manufacturer?

Steps to License a Product

Invent an original product.
Research your market.
Do a patent search.
Consider filing a provisional patent application.
File a patent application.
Search for licensees.
Sign a licensing agreement.
Collect royalties.

How does a license and manufacturing agreement work?

RECITALS WHEREAS, Licensor and Licensee intend to enter into this License and Manufacturing Agreement, wherein Licensee shall be granted certain rights to manufacture, distribute and sell the Licensed Products (as hereinafter defined) on the terms and conditions set forth herein.

What does MLA stand for in manufacturing agreement?

This is where a license manufacturing agreement comes into play. An MLA is a contract between the manufacturer and inventor. Such a contract creates an agreement between two individuals, the licensor and licensee, where a licensor bestows a copyrighted license to the licensee.

When do you license your idea to a manufacturer?

Legally speaking, you have licensed your patent when you (the licensor) grant exploitation rights over your patent to a licensee (the person you are licensing it to.) In this case, the licensee is whichever manufacturer you have licensed your patent to.

What does a non exclusive manufacturing license mean?

A non-exclusive license means that licensors can sell non-exclusive licenses to many other manufacturers as he pleases. Sole licenses allow licensors the chance to manufacture and sell by themselves, but they could not issue licenses to any other party. Trademarks comprise a brand or visible device that makes it different from other businesses.

When to license or sell a product or process?

If your firm has developed a better product or manufacturing process, selling or licensing that knowledge, if done effectively, would translate into additional income. If your firm does not have the knowledge, time or resources to be actively engaged in international marketing in a country or a region, licensing may be a viable option.