Entrepreneurship and Small Business (ESB) Certification Practice Exam

What is required to license a product?

1. Patent

2. Authorization

3. Trademark

4. Investment

The correct answer is: Authorization

Licensing a product generally involves obtaining permission from the owner of intellectual property or an asset to use, manufacture, or sell that product. The correct choice identifies the concept of authorization, which is a critical element in the licensing process. To license a product, a formal agreement is established between the licensor (the owner) and the licensee (the user). This agreement outlines the terms, conditions, and rights of each party. The authorization represents the legal consent needed to proceed with the use of the product or the underlying intellectual property. While patents, trademarks, and investment are important considerations in the broader context of product development and business, they do not directly represent the mandatory process for licensing. A patent protects an invention, a trademark protects brand identity, and investment refers to funding required for business ventures—all of which may be essential, but they don’t by themselves fulfill the criteria for obtaining a license. Thus, understanding that authorization serves as the foundation for legally utilizing another's product is fundamental in the context of licensing.