Licensing Agreement

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 privilege to use or do something in particular. For example, in a manufacturing contract, the owner of a product may grant a license to a manufacturer to produce or sell its goods. Or, in a trademark licensing agreement, an owner of a trademark may grant to a licensee the right to sell certain goods or services under the trademark name. Or, in a patent license agreement, the owner of the patent may grant to a licensee the privilege to use the patented technology for a specific purpose. A licensing agreement is distinguishable from an assignment, in that a license is revocable by the licensor, and the licensee usually only receives a limited privilege, whereas in an assignment, the assignee takes full ownership of the item that is being assigned. In that context, licenses grant fewer rights to recipients than do assignments. However, a licensee may prefer a license over a complete assignment because a license may cost the licensee less, and because the licensee may not be interested in all of the rights of ownership.