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Copyright 2006
Cornell University.
All rights reserved.



Licensing opportunities are important to consider along with IP protection. When you have the rights to an invention or design, you (the licensor) can sell those rights (to a licensee) instead of producing and selling a final product.

Payment for the use of intellectual property is in the form of one-time, annual, or per item produced (royalties) and the relationship often continues for years.

In design fields, licensing can be for the rights to exclusive use of designs or to produce or distribute designs. The designer or owner of the licensed name or product is usually involved with the design of the product and holds specific rights to control its content, specifications, modifications, and production.

Licensing seems like an easy way to gain wider distribution without the headaches. But licensing agreements can sour and the legal contract is your only recourse.

As in all IP protection, the best advice is to work with an attorney to develop a written agreement protecting you for the lifetime of your business.

The recent lawsuit by Calvin Klein against Warnaco illustrates licensing of a designer's name/company and some of the issues surrounding such an agreement.

When should you consider licensing instead of producing and marketing a product on your own? Here are some guidelines.

Strategic Advantages of Licensing (Beamish, 1996)
When you lack the capital, resources, or knowledge of foreign markets.
When you want to test a product or develop a market.

When the technology/design is not central to your core business.

When you require licensee to inform and provide access to any new developments with technology.

When licensor will sell design/technology in small secondary markets.
In foreign markets that have restrictions or risk.
When licensee is not likely to be future competitor.
In a fast-paced environment where licensee not likely to become superior to licensor.




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