Intercompany Licensing Agreement

Intercompany Licensing Agreement: A Guide for Business Owners

In today`s global economy, many companies collaborate with each other to achieve their business goals. One of the most common forms of collaboration is an intercompany licensing agreement. This type of agreement allows two or more companies to share their intellectual property, which can be crucial to business success.

In this article, we`ll explore what an intercompany licensing agreement is, its benefits and drawbacks, and how to create a successful licensing agreement for your business.

What is an Intercompany Licensing Agreement?

An intercompany licensing agreement is a legal document that allows companies to use each other`s intellectual property (IP) for commercial purposes. The agreement outlines the terms of use, the length of the licensing agreement, and any royalties or fees that must be paid.

The intellectual property can include patents, trademarks, copyrights, and trade secrets. By sharing their IP, companies can access new markets, expand their product offerings, and increase revenue.

Benefits of Intercompany Licensing Agreement

Collaborating with another company through an intercompany licensing agreement has many benefits. For example:

1. Access to new markets – When you collaborate with another company, you can access their customer base and sell your products or services in a new market.

2. Reduced costs – By sharing intellectual property, you can reduce development costs, manufacturing costs, and legal costs.

3. Increased revenue – Sharing your intellectual property with another company can lead to increased revenue through licensing fees or royalties.

4. Improved product offerings – By collaborating with another company, you can combine your expertise to create a better product or service.

Drawbacks of Intercompany Licensing Agreement

While intercompany licensing agreements have many benefits, they also come with some drawbacks. Some of the common drawbacks include:

1. Loss of control – When you share your intellectual property with another company, you lose control over how it`s used.

2. Risk of infringement – If the other company doesn`t respect your intellectual property rights, you risk infringement and financial loss.

3. Expensive legal fees – Creating an intercompany licensing agreement can be expensive due to legal fees and other associated costs.

Creating a Successful Intercompany Licensing Agreement

To create a successful intercompany licensing agreement, you should follow these best practices:

1. Clearly define the terms of use – The agreement should clearly define how the intellectual property can be used, by whom, and for how long.

2. Protect your intellectual property – The agreement should include provisions to protect your intellectual property rights, including confidentiality and infringement protection.

3. Agree on royalty fees – Before signing the agreement, both parties should agree on the royalty fees or revenue sharing terms.

4. Allow for flexibility – The agreement should allow for flexibility in case of market changes or other unforeseen circumstances.

5. Work with experienced legal professionals – Collaborating with a legal professional experienced in intercompany licensing agreements can greatly reduce the risks and ensure a successful collaboration.


An intercompany licensing agreement can be an excellent way to collaborate with another company and achieve your business goals. By following the best practices outlined in this article, you can create a successful agreement that benefits both parties. Remember to protect your intellectual property and work with an experienced legal professional to ensure a successful collaboration.