License Agreements

License Agreements

License Agreements in International Trade

Meaning of License Agreements, according to the Dictionary of International Trade (Global Negotiator): A contractual arrangement in which the licensor's patents, trademarks, service marks, copyrights or know-how may be sold or otherwise made available to a licensee for compensation negotiated in advance between the parties. Such compensation may consist of a lump sum royalty, a running royalty (based on volume of production), or a combination of both. Licensing enables a firm to enter a foreign market quickly and poses fewer risks than setting up a foreign manufacturing facility. Furthermore, it allows parties to overcome tariff and non-tariff barriers trade. In international markets the licence agreement most commonly used are the International Trademark License Agreement and the International Manufacturing License Agreement.


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