Why patent licensing done?

There are number of reasons for which a patent owner may like to grant a license to a third party. For example, the patent owner may not have the required manufacturing facilities, and therefore allows others to make and sell his/her patented invention in return for “royalty” payments. In another case, a patent owner may have inadequate manufacturing facilities to meet the market demand. In such cases, he/she may be interested to license the patent to another manufacturer in order to gain from another income stream. Yet in another situation, the patent owner wishes to concentrate on one geographic market and therefore may choose to grant a license to another individual/organization, with interests in other geographical markets. A licensing agreement can help to develop a mutually-beneficial business relationship. Unlike selling or transferring a patent to another party, the licensor continues to have property rights over the patented invention.