Knowing what a licensee is, is more than just a licensee definition. Knowing how it is used in practice - for example, what is a product licensee or what the differences between invitee vs licensee are - is crucial to ensure that you know your legal position if you ever enter a licensing agreement.

What is a licensee?

A licensee is an entity, person, or company given authorization by another entity, person, or company to use an asset that the potential licensee wants to use. When providing a licensee with a license to use a product or asset that they own, the licensor will often be paid a fee to reimburse them for the trouble. 

Additionally, that remuneration can often be seen to reward them for owning the wanted asset. Patents are an excellent example of this in everyday life. Assets that are patented are commonplace in many industries. The patent owner will often become a licensor who then provides licenses to use that patented asset to licensees. 

How does a licensee work?

Given that a licensing agreement between a licensor and a licensee permits the licensee to use property belonging to the licensor, how does the role of the licensee work? And what is the difference between a licensee vs invitee? 

With the help of a strong and credible licensing agreement, these answers should be clear. It should identify what is expected of the licensee when using the licensor's property and what the payment structure in return should be. For example, if a licensee seeks the use of a song written by someone else, they must sign a licensing agreement with a license first. That agreement should state whether the licensee has to pay the licensor every time they play the song or if there is a flat fee - among many other models. In comparison, an invitee will have been asked by the licensor to use their property.

Advantages of a licensee 

Legally speaking, the most essential advantage of a licensee is the fact that using an asset someone else owns becomes lawful. Without becoming a licensee and thus obtaining permission to use an asset, if a person goes on to use it, they are breaking the law. In fact, it is akin to stealing as the non-licensee is choosing to circumnavigate payment and just goes on to use the asset illegally anyway. 

For that reason, the advantage of having a licensee and licensor relationship is that the licensor is rightfully rewarded for owning an asset. Additionally, having a licensing agreement allows both sides of the party to identify what is expected from both sides from the outset of the contract. The relationship should be strengthened as a consequence, and the chance of legal disputes between the two should be much reduced if the contract is properly finalized in the contract creation process. 

Contractbook and a licensee

Being a licensee means that you enter into a business relationship with a licensor, requiring a licensing agreement to ensure that all dealings between the two parties are above board. Using a template from our library to help create a licensing agreement that works for both sides is a key way that Contractbook can help any potential licensees. Lawyers create our agreements so they can be relied upon, but crucially they materially reduce the time to create a new agreement in the first place. It is a win-win situation.

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