Licensing is a business model that focuses on developing intellectual property that is licensed to third parties. The emphasis is on commercializing the rights rather than realizing and capitalizing on the intellectual property. A significant benefit of licensing is that rights can typically be sold to multiple interested parties. Licensing enables a business to diversify its revenues and risks. Additionally, because the products and services are frequently distributed at a faster rate, the brand becomes more recognizable, and customers are more likely to remain loyal. On the downside, licence fees are typically lower than those associated with outright sale of the IP. On the plus side, the products and services will almost certainly be distributed much more quickly, resulting in increased sales.

Additionally, licensing enables you to focus exclusively on research and development without requiring additional competencies in the production or marketing of specific applications. These responsibilities are assumed by the purchasers of the rights. On the other hand, the benefit is that no costly, lengthy, or uncertain research and development activities are required.

 When and how to apply Licensing:

 This pattern is most effective in contexts that are knowledge- and technology-intensive. Licensing is an intriguing way to monetize products and technologies that are not central to your business. Rather than discontinue these products and technologies, you can leverage a licensing model to generate consistent revenue streams for your business. Bear in mind, however, that strong patents are a necessary condition for successful licensing. Additionally, you can use licensing to increase product or brand awareness and accelerate global distribution.
Well-known companies that use this pattern are Harley Davidson and Lego.