- April 12, 2021
- Posted by: JSA
Suppose, for example, that two years ago, licensee XYZ agreed to pay an 8% fee to licensee A. We also assume that the royalty compensation system allowed licensee XYZ to reduce its royalties to licensee A by 50% of its future royalty obligations. Therefore, if the XYZ licensee agrees to pay a 4% licence fee to LicenseE B for the current year, the XYZ licensee could lower its royalty rate to licensee A to 6% ((8% – (50% x 4). There are usually floors that deal with the extent to which royalty reductions can decrease. In addition, the facilitation of the licence may apply to other provisions of the licensing agreement, such as the . B milestone payments that the licensee must pay to the licensee. A decisive step before negotiations is to coordinate the objectives and objectives of the negotiations in your company. It is imperative that each of your team read the same script, otherwise you will be sabotaged by your own colleagues. It is often advisable to make sure that you understand what your boss expects from the negotiations. For example, I recently had a client who was very confident that he could quickly enter into a relatively small licensing agreement. There was also little chance of a larger agreement in the future.
He came to his advantage to ask his boss what was more important to the organization: a high security of short-term income or to wait a few quarters to try to conclude a deal several orders of larger. Perhaps the way to get the greatest leverage with the licensee is to win the support of an internal champion. Among the best in-house champions are marketing professionals who make sound commissions for related products and specialists in the research community. An in-house champion will convince his colleagues much more effectively to enter into a licensing agreement with your company than you will if you simply speak to a destination licensing professional. Since most of the focus licensee`s discussions focus on the possibility of a license without the inventor`s involvement, it is imperative that the inventor benefit from the consistent application of internal printing. In the broadest sense of the word, licensing is an important type of entry for companies considering international expansion. A licensing agreement gives a foreign company the right to manufacture and/or sell products from another company in its country. The agreement may also include production and sale in more than one country. The taker takes the risk and invests in product production handling facilities and management facilities for other members of the supply chain in order to deliver the product and even sell it to the end consumer. The licensee usually receives a fee for each unit produced and sold.
Because the licensee has little investment, this method is seen as an easier way to become an international or global company. The publication of hot films such as the Lord of the Rings trilogy also generates numerous licensing agreements and links between mass distributors and licensees for toys, games and children`s clothing. Some retailers go so far as to require exclusive agreements for apparel and film products in order to adopt market differentiation strategies. Licensees often place more emphasis on technology when their competitors are deprived of it. While it is generally advisable to develop approach points, there are some risks in applying this sequencing strategy in the licensing world. Trying to attract an impulsive reaction from a large organization with its complex approval process is more likely to backfire than to yield results.