Under a pure license agreement, the licensor may terminate the contract in accordance with its terms and customary law after approval and without giving any reason, unless it is linked to an interest or made irrevocable by contract. A license that has been associated with an interest cannot be revoked by the licensor without liability and possible damages being incurred. In the event that a licence is associated with an interest, the licensor shall grant the licensee a reasonable period of time to remove that interest from the property prior to termination. Since a license does not confer ownership on the licensee, the license is terminated in the event of a sale of the property and cannot be imposed on the new owners of that property. In addition, the death of the licensee or licensor terminates the contract. Patent licenses have been studied in formal economic models in the field of industrial organization. In particular, Katz and Shapiro (1986) investigated the optimal licensing strategy of a research lab that sells products to competing companies in the market. [15] It turns out that (compared to the welfare maximisation solution) the licensor`s incentives to develop innovations may be excessive, while the licensor`s incentives to disseminate the innovation are generally too weak. As a result, the revolutionary work of Katz and Shapiro (1986) was expanded in several directions. For example, Bhattacharya, Glazer and Sappington (1992) have taken into account that companies acquiring licences will have to make further investments in order to develop marketable products. [16] Schmitz (2002, 2007) has shown that asymmetric information due to adverse selection or moral risks can cause the research laboratory to sell more licenses than with complete information.
[17] [18] Antelo and Sampayo (2017) investigated the optimal number of licenses in a signaling model. [19] A license agreement is a way to make money through intellectual property such as a patent, copyright or trademark. This is called intangible property (IP). By entering into this agreement, the licensor or the person who owns the intangible asset receives a royalty for a licensee to use or market the intellectual property. You would not use a commercial lease to rent your one-bedroom home. The same goes for licenses. Before you license your intellectual property, make sure you know what type of agreement you need. While many license terms are standard, there are critical differences specific to each type of intellectual property. Work with a qualified licensing lawyer so they can ensure that all terms of the contract are properly written, that your rights are protected, that the contract is clear, and that nothing is open to “interpretation” by you or your licensee. .