What is the legal distinction between selling a product and licensing it?
The legal distinction between selling a product and licensing it lies primarily in the rights granted to the buyer or licensee. To understand the difference, let's break it down further:
1. Selling a Product:
When you sell a product, you transfer ownership and title of the physical item to the buyer. The buyer then acquires the right to use, possess, and dispose of the product according to their own discretion within the limits of applicable laws. As the seller, you no longer have any control or rights over the product once the sale is completed. However, you might still retain certain intellectual property rights associated with the product, such as trademarks or patents.
2. Licensing a Product:
Licensing involves granting permission to another party (the licensee) to use your intellectual property while retaining ownership of it yourself. This allows the licensee to utilize your intellectual property for a specific purpose, under certain agreed-upon terms and conditions. The licensor (the owner of the intellectual property) maintains control over the product, including the right to revoke or terminate the license if the licensee breaches the agreement.
In practical terms, licensing is commonly employed when dealing with intangible assets, such as software, music, patents, or trade secrets. License agreements outline the extent of the licensee's rights, any restrictions imposed, potential royalties or fees, and the duration of the license.
It's important to note that specific laws surrounding selling and licensing may vary between jurisdictions, so consulting legal professionals or researching local laws is advisable to ensure compliance and protection of your rights.