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Definition

Technology licensing

Technology licensing is the licensing of proprietary technology that the licensor typically controls by virtue of a utility patent.

This type of licensing agreement typically involves one of two scenarios. First, firms develop technologies to enhance their own products and then find noncompetitors to license the technology to spread out the costs and risks involved. Second, companies that are tightly focused on developing new products pass on their new products through licensing agreements to companies that are more marketing oriented and that have the resources to bring the products to market.

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