Why obtain or grant license rights?
Patents, trademarks and designs provide very extensive rights of prohibition. Many proprietors of property rights are not able to exploit these opportunities adequately on their own. Business opportunities thus often go to waste.
It sometimes happens that proprietors of property rights seek licensees, for example as part of a franchise system. Licensees are enticed into entering the market by way of alluring commercial prospects; this is referred to as carrot licensing.
The situation is different when a competitor is already active in the market and infringes the property right. Where the owner of the property rights is prepared to tolerate this in the market but demands appropriate compensation in return, this is referred to as stick licensing. The owner of the property rights often has a strong negotiating position, and there is often a great deal of pressure on the infringer.
Many business models can hardly be imagined without protection by intellectual property rights, for example franchise systems in fast food restaurants or chains of coffee shops. Also, for products in which a number of components interact, property rights can help to stabilize the commercial relationships with the manufacturers of the individual components.
The preparation of licensing agreements is frequently referred to as the supreme discipline in the field of IP contractual drafting, because they can be put together with such flexibility. We are happy to help you with this as a part of