A licensing agreement lets one business use another party’s intellectual property, brand, content, technology, software, trade secrets, or other protected asset under specific conditions. For Florida business owners, the right license depends on what is being licensed, who owns it, how it will be used, where it can be used, whether the license is exclusive, how royalties are paid, and what happens if the agreement ends.
Before signing a licensing agreement, the parties should clearly define the licensed asset, territory, duration, royalty structure, sublicensing rights, quality control, confidentiality, audit rights, termination rights, and ownership of improvements. A short agreement may look simple, but missing terms can create expensive disputes later.
Are you thinking of licensing out something that you own, but aren’t sure about the various types of licensing agreements? There are a few ways to license intellectual property (or “IP”). To do so, you must first understand the different types of license agreements.
Here, we’ll discuss what a license agreement is and how you can decide which is right for you.
What is a licensing agreement?
A licensing agreement is a legal contract by which one party that owns certain IP allows another party to use that IP. The party who owns the IP (the licensor) receives payment (a royalty) when the other party (the licensee) uses the IP.
Licensing agreements can be broken down by the types of IP they license. They can be further broken down into exclusivity and duration.
The Type of License You Choose Controls the Deal.
A licensing agreement should do more than give permission. It should define who owns the asset, who can use it, where it can be used, how royalties are paid, and what happens when the relationship ends.
Quick answer
Start with the asset being licensed, then decide the scope: exclusive or non-exclusive, territory, duration, royalties, sublicensing, quality control, confidentiality, and termination rights.
Licensing Deal Triggers
Trademark license
Best for brand names, logos, slogans, product marks, service marks, merchandising, co-branding, franchise-style use, and distribution relationships.
Copyright license
Best for content, artwork, software code, video, music, photos, training materials, website copy, designs, and marketing assets.
Patent license
Best for inventions, technology, products, processes, devices, manufacturing rights, research commercialization, and field-specific use.
Trade secret license
Best for formulas, methods, processes, customer information, technical data, workflows, software logic, pricing models, and confidential know-how.
Choose the Deal Structure
Exclusive License
Useful when one licensee needs protected market rights, but it can limit the licensor’s future deals if the scope is too broad.
Non-Exclusive License
Useful when the licensor wants broader distribution, multiple partners, or recurring revenue from several licensees.
Sole License
Useful when one licensee gets rights, but the licensor also keeps the ability to use the licensed asset directly.
Before You Sign a Licensing Agreement
Common Mistake: Licensing Without Defining Scope
A vague license can create disputes over whether the licensee can sublicense, expand into new territories, use the asset in new formats, create derivative works, or keep selling after termination.
Need a Licensing Agreement That Matches the Deal?
BrewerLong can help Florida businesses draft, review, negotiate, and update licensing agreements for brands, content, technology, software, patents, copyrights, and trade secrets.
What Does a Licensing Agreement Allow?
A licensing agreement allows the licensee to use, distribute, or modify the licensor’s intellectual property, such as patents, trademarks, or copyrights, often in exchange for royalties. These agreements enable revenue generation for the licensor while providing the licensee with rights to commercially exploit the property.
| Business Goal | Licensing Agreement to Consider | Key Clause to Watch |
|---|---|---|
| Let another company sell branded products | Trademark license | Quality control and approved use |
| Let a company use artwork, video, music, copy, or software code | Copyright license | Scope of rights and written grant |
| Let a manufacturer use an invention | Patent license | Field of use, territory, exclusivity |
| Share formulas, processes, methods, or customer data | Trade secret license | Confidentiality and access restrictions |
| Let a distributor resell software or content | Software/content license | User limits, sublicensing, updates |
| Build a brand partnership | Co-branding or promotional license | Approval rights and brand standards |
How to decide between types of licensing agreements
1. Decide which IP you need to license.
Patent Licensing
Patents cover science and innovation. Patent licensing agreements are the documents through which a patent owner allows someone else to use their patent.
In practice, patent owners choose to license their patents so that they can have it manufactured and distributed widely. The individuals and businesses that create patentable material (like new inventions) aren’t usually the same parties that can easily manufacture and distribute it. It’s easier to allow someone else to handle the business side of the patent while continuing to earn royalty payments.
These are generally the most complex types of license agreements because of everything involved in obtaining and maintaining a patent.
Trademark Licensing
Trademarks are signifiers of commercial source, namely, brand names and logos or slogans. Trademark licensing agreements allow trademark owners to let others use their IP.
Most often, trademark owners license their trademarks for commercial goods, like clothing, iPhone cases, or food products.
Copyright Licensing
Copyright is the artwork of the IP world. Copyrights exist in, for example, works of visual art, like paintings, or movies, or songs. Copyrights also exist in characters, like Mickey Mouse.
Copyright licensing agreements are often used for consumer goods, just like trademark licenses. They are also used for distributorships, such as with musical works or movies.
Trade Secret Licensing
Trade secrets are unique, in that they are not registered with the government. Patents, trademarks, and copyrights are most valuable when they have been registered with the federal government. Trade secrets are protected only through their secrecy.
Two of the most famous examples of trade secrets are the formulas for Coca-Cola and the recipe for KFC chicken.
Trade secret licensing agreements often come with non-disclosure agreements (or NDAs). NDAs state that the party receiving certain confidential information cannot share it with anyone.
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2. Type of Relationship Between Licensor and Licensee
There are three main types of licensing agreements:
- Exclusive License: Grants the licensee sole rights to use the intellectual property (IP). The licensor cannot license the IP to anyone else during the agreement term.
- Non-Exclusive License: Allows the licensor to license the IP to multiple licensees. This is commonly used when the licensor wants to maximize reach and distribution.
- Sole License: Gives one licensee rights to the IP, but the licensor can still use the IP themselves. It offers a balance between control and market distribution.
3. Decide on the duration of your license.
There are also two different types of license agreement durations.
Perpetual
A perpetual license is one where the licensee buys the right to use the IP just once and then can use it for a lifetime. Often, these are the more expensive type of license because the licensor won’t receive ongoing royalties.
Perpetual licenses can be seen most commonly in software.
Term
A term license is organized one of two ways: (1) the licensee can pay a one-time fee for a certain term or (2) the license can pay per use (these are traditional royalties).
Term licenses are much more common across all industries. Although many people don’t think of it this way, when you pay Netflix each month, part of that fee is a license to use their proprietary digital software.
According to BrewLong attorney, Ashely Brewer: “Licensing agreements are like lease agreements. A lot depends on the property involved and the relationship of the parties.”
CONTACT BREWERLONG TODAY FOR YOUR LICENSING NEEDS
As you can see, there are many types of licensing. An experienced IP attorney can help you figure out what type of license agreement you need, as well as what needs to go into that agreement.
To schedule a consultation about your IP licensing, call our office at 407-660-2964, contact us online, or email us at contact@brewerlong.com.
FAQs
What are the main types of licensing agreements?
The main types include trademark licenses, copyright licenses, patent licenses, trade secret licenses, software licenses, brand licenses, content licenses, and technology licenses. Licensing agreements can also be structured as exclusive, non-exclusive, sole, perpetual, or term-based agreements.
What is the difference between an exclusive and non-exclusive license?
An exclusive license gives one licensee the right to use the licensed asset within the agreed scope. A non-exclusive license allows the licensor to grant similar rights to other licensees.
What is a sole license?
A sole license gives one licensee rights to use the asset, but the licensor usually keeps the right to use the asset as well. It is different from an exclusive license because the licensor may still retain direct use rights.
Can I license a trademark without losing ownership?
Yes. A trademark owner can license another party to use the trademark while retaining ownership. The agreement should include quality control provisions, approved uses, brand standards, and remedies for misuse.
Does a copyright license need to be in writing?
A non-exclusive copyright license may sometimes arise without a formal written agreement, but exclusive copyright grants should be in writing and signed. Under 17 U.S.C. § 204, a transfer of copyright ownership requires a signed writing.
Can a patent license be limited to one industry?
Yes. Patent licenses may be limited by field of use, territory, time, or market. The USPTO notes that patent licenses can be limited by time, geography, or field of use.
What should a trade secret license include?
A trade secret license should include confidentiality obligations, restricted access, security controls, no reverse engineering, return or destruction obligations, and remedies for unauthorized disclosure or use.
Should Florida businesses use a licensing agreement template?
A template may help identify common clauses, but it may not fit the asset, risk, royalty model, Florida business relationship, tax treatment, territory, or enforcement needs. A custom review is safer for valuable IP or long-term licensing deals.
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