Introduction

A licence confers permission to do something which would otherwise be constrained. There are many forms of licence such as a fishing or driving licence and all have their own legal characteristics. However, licensing should be considered to be the tool of commercial practice and the route to mutual profit. To an organisation, licensing is a part of the overall activities of the company and cannot be separated from it. As such, licensing represents one of a series of options to a potential partner and this should be borne in mind once you have decided to licence your technology. Licences form an alternative to in-house R & D programmes and can be used to completely buy in a new technology or to augment existing programmes. Theoretically, the latter should maximise the use of internal resources without total dependence upon outsiders. Additionally, licensing can be used where direct capital investment in a project is difficult for political or other reasons. The action of licensing implies a degree of trust between the parties and could well be a long-term relationship, with the generation of a considerable amount of goodwill. Relationships can break down and you should take this into account when entering a licensing arrangement. Above all, when negotiating a licensing arrangement, proceed independent of trust.