Licensing Agreement Disadvantages


– What are the main contractual agreements for technology transfer? When a licensing agreement is signed, the taker assumes the full risk in the agreement. They depend on the quality of the intellectual property that is used to make their own profits. If they do a great job and make a lot of money, the licensee can apply for an extension that costs more than the original license. There is also no guarantee of exclusivity with many licenses, which means that several companies could compete in the same market using the same tools and products to generate revenue. Basically, a licensing agreement seems to be an obvious choice because you have to collect a percentage of the revenue generated and not do the work. You can sit back, relax and check your mailbox to check what always unsuitable return on your investment when the funds start rolling. Other potential risks and disadvantages of the patent license are: In addition, by licensing your product, you create effective competition for yourself. You can try to limit the scope of the license as much as possible in order to avoid your competitors the unnecessary advantage in the market. -The exclusive contract is a contract under which the taker has the exclusive right to use the commercial object granted in the scope and duration of the licence, while the licensee may only enter into a licensing agreement for industrial property with third parties and may only use these industrial property objects with the authorisation of the purchaser. -With regard to the disadvantage for the licensee, the licensee may have to make financial commitments to technologies “not yet ready” for commercial use or to have to modify the technology to meet their business needs; An intellectual property licensing agreement can result in additional costs for the product. Many technologies built into products can create products with high-tech content, but they are very expensive when they are published on the market; Licensing can create technological dependence on suppliers who cannot renew the licensing agreement and negotiate a licensing agreement with other competitors to restrict the market or restrict the operating activities authorized by the licensing agreement.

On the other hand, the granting of a technology license can lead to considerable effort and determination to find the right buyer. To give your product the best chance of success, you should worry about evaluating potential licensees and structuring your licensing agreement. In May 2018, Nestlé and Starbucks entered into a $7.15 billion coffee licensing agreement. Nestlé (the licensee) has agreed to pay $7.15 billion in cash to Starbucks (the licensee) for exclusive rights to sell Starbucks products (single serving coffee, teas, beans, etc.) through Nestlé`s worldwide distribution network. In addition, Starbucks receives royalties from coffees and packaged teas sold by Nestlé. The most common type of agreement for independent contractors falls within the patent licensing category (“All types of licensing models”). In the simplest sense, you allow an entity to use your intellectual property, your idea or your invention, which you want to protect by a patent.