What to include in a licensing agreement

On Behalf of | Dec 28, 2020 | Licensing |

Having a license agreement is important in certain situations. This legal contract outlines details and terms between a licensor and licensee.

Although each agreement will contain unique elements to the situation, most licensing agreements will contain similar basic elements. Typical language refers to the licensee’s rights and responsibilities regarding the use of the licensor’s property as well as the royalties paid as a result.

Situations that require a licensing agreement

There are numerous reasons why a licensing agreement may be appropriate. According to FindLaw, any software of a company should have a license agreement to legally protect the company. Another name for this legal contract is end-user license agreement, as it outlines how the customer utilizing the software can use it, and the agreement summarizes the rights of the user.

Inc. outlines other reasons two parties may apply a licensing agreement. These include granting the licensee the right to use a trademark or brand name, manufacture and sell products or use the licensor’s patented technology.

Basic elements of an agreement

Some of the main elements of a licensing agreement include:

  • Financial arrangement between the licensor and licensee
  • Time frame for market release
  • Contract provisions such as renewal options, length and conditions for termination
  • Control rights of patents, copyrights or trademarks
  • Quality control conditions
  • Territorial or competition rights

Licensing agreements are often complex, and they usually contain a variety of lengthy terms. Because they are legally binding, and can affect a company’s rights and bottom line, both the licensor and licensee should consult with an attorney while drafting the contract and before signing it.

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