Licensing

Licensing allows one or more licensees to obtain the right to use an asset commercially from a licensor. The licensing agreement may cover technology, products, trademarks, designs, patents, know-how and more. The right is usually granted for a specific geographical market, industry, field of use or a combination of these.

In many industries worldwide, products have short lifecycles, making it important to reach the market quickly. Licensing is therefore common in these industries. In industries where technology is complex and innovations often depend on each other, cross-licensing is both common and necessary.

• Licensing allows you to focus on the markets you know while earning revenue from your product or service in other markets.
• You can enter new geographical markets with significantly less effort and risk.
• You can adapt and sell the product/service to other industries and for other applications.
• You can reach the market faster through a licensee with the resources and knowledge of the relevant geographical market or market segment.
• You need less capital because you can avoid production, marketing and sales costs if the licensee already has production facilities, distribution channels and marketing resources.
• By licensing out technology at an early stage, you can reduce development costs.
• You can earn licensing income from royalties.
• There are benefits for the licensee.
• Access to attractive technology, knowledge and trademarks – potentially on an exclusive basis – that can give your business a competitive advantage.
• You gain access to new technology and knowledge without having to conduct your own research and development. This enables you to offer the latest and most effective solutions in the field and position your business as innovative in the market.
• Your company's own products can benefit from synergies with licensed-in technology, making them more attractive, and vice versa.

A licensing process often starts with initial discussions. Sometimes a potential licensee will contact you, but in most cases, you as the licensor will need to identify and contact potential licensees. You may find licensees among your competitors and business partners.

The aim of the initial discussions is to reach a letter of intent confirming that you intend to work towards agreeing a licensing agreement, subject to resolving a number of outstanding points.

When it comes to the negotiations themselves, you should seek legal assistance. There is no simple formula for drafting a licensing agreement and then negotiating a satisfactory outcome.

You need to tailor the agreement to your needs, and you should always seek professional legal assistance with this work. A lawyer can also support you directly in the negotiations and, importantly, advise you on how to proceed.

Once both parties have signed the agreement, the follow-up begins. As the licensor, you need to take an active role and follow up with the licensee as agreed. Remember, it is also in your interest for the licensee to maximise sales.

Remember that these agreements are not templates and must be adapted to your specific situation. Consult a lawyer before signing any agreements:

Example of how to draft a licence agreement – Norwegian version (doc)

Example of how to draft a licence agreement – English version (doc)