Many products necessarily rely on technologies developed in a number of different places. It is increasingly difficult, in the case of a complex product or service, for any one company to control all of the required intellectual assets. Legal agreements, including licensing and cross-licensing arrangements, terms of settlement of disputes, and so forth, can provide even competing businesses with certainty of freedom-to-operate, while also maximising the value extracted from intellectual assets.
While licensing an innovative technology to competitors may seem intuitively counterproductive, the practical reality may be that receiving a share of the profit from every product sold in a particular category (e.g. through royalties) may be a more profitable proposition than being the only supplier with the innovation, and yet still only a fractional share of the market.
Legal agreements may provide a business with greater freedom than it would otherwise have, or they may restrict what the business is able to do without breaching any terms or infringing the intellectual property rights of others. Therefore, maintaining good records of legal agreements, and their impacts on business, is an important element of a good intellectual asset management strategy.