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Licensing

Industrial firms in a variety of sectors take advantage of many opportunities for licensing, and licensing agreements often develop as a result of collaborative research. A license is another word for a contract. A license is similar to a patent, except rather than being granted by a government, a license is granted by an individual. An inventor, having created or discovered a brilliant innovation, may not want to spend the hundreds of thousands of dollars needed to properly start and operate a business for their invention. An alternative for inventors is licensing their invention, allowing another company to manufacture and/or sell their product.

A license itself is a written agreement that authorizes another company to use or sell an individual’s invention. This license includes the key terms and conditions such as royalties, insurance, time frame and special conditions such as if the company goes bankrupt. It is not necessary to have a patent with a license. A good strategy for inventors is to license their products while waiting to receive patents (also known as patent pending) to maximize their profits as quickly as possible. Licensing is related to technology transfer as it deals directly with commercialization of innovations.

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