We can define licenses as, “an owner giving permission to a legal entity or a real person to make, produce, or use an owner’s tangible and/or intangible property.” Almost anything can be the subject of a License. It is best to have a written document for any License agreement.
Types of Licenses
There are exclusive and nonexclusive Licenses.
When the owner grants an exclusive License, it means that the owner will not grant another License to a third party.
Whether an exclusive or a nonexclusive License is granted can impact the bargaining power of the Licensor or the bargaining power of the Licensee. For example, a multinational franchisor may not grant exclusive Licenses while a start-up may be happy to grant an exclusive License.
What to Include in a License Agreement
- As long as it is legal, a License may contain any type of clause or section related to the owner’s tangible and/or intangible property as well as the duties of each party
- Definitions regarding the meanings of specific words used in the License
- Grant of permission to make, produce, or use an owner’s tangible and/or intangible property
- Specific description(s) of the licensed tangible and/or intangible property
- Description of each geographic territory covered by the License and the term of the License
- Obligations to commercialize the licensed tangible and/or intangible property and milestones payments
- License fees and running royalties
- Licensee’s progress reports, records and audits
- Banks and currency used for payments and timing of payments
- Ownership of jointly created tangible and/or intangible property related to the licensed tangible and/or intangible property
- Confidentiality and trade secrets
- Licensee’s guarantees to comply with governmental regulations in all jurisdictions where Licensee is using or selling the licensed tangible and/or intangible property
- Dispute resolution
- Termination and wrap-ups
- Continuing obligations after termination
The above are just some sections and clauses that can be included in Licenses.
License Agreements can be complicated contracts. If your company needs assistance to prepare its Licenses or your company needs help to determine if it is advantageous to execute a License, please contact Business Patent Law, PLLC.
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