Licensing Issues

If the decision is made to license the manufacturing and distribution rights to an outside party, then the licensing agreement must meet the needs of both the Manufacturer and the R&D Company.

Needs Of The Manufacturers Selling To End Users

Manufacturers who have their own well developed distribution channels are in touch with the marketplace. Typically, firms without their own R & D capacity will have to license in the products they wish to sell in the marketplace. When entering into a licensing agreement, the following issues will be important to the Licensee (the party using the license).

Research Organization Selling To Existing Manufacturers

R & D companies do not have direct access to the marketplace and tend to rely on the manufacturer for their market intelligence. This requires close collaboration with their manufacturing partners. The licensing agreements must be flexible enough to ensure access to a licensee’s confidential market intelligence, while still enjoying the freedom to deal with the licensee’s competitors. Small licensors will often be dealing with a much larger licensee, and the issue of company size may be an issue. When entering into a licensing agreement, the following issues will be important to the licensor (the party granting the license).