The licence agreement

The license agreement

1.With a license agreement, a party is offered the option, subject to payment (usually royalties), to use knowledge (know-how) or an intellectual right (patent, copyrights, trademarks, exploitation rights on databases).

Sometimes there are business licenses in which a whole of knowledge and rights are made available, usually together with a franchise agreement.

In a collaboration, companies can mutually license each other (cross-licensing), or the use of an intellectual right can also be contributed to a company with a view to a collaboration. Different companies can transfer their patents or know-how into a new company (ownership or delectation of it) which then ensures further development.

It is therefore obvious that such agreements play an enormously important role in our knowledge society.

2. That license can then be simple or exclusive (in the latter assumption there is a geographic demarcation (e.g.1 country) for the licensee), it can be total or limited (e.g. in duration, or in type of property rights - reproduction e.g.).

In order for third parties to respect this, a specific form of publicity is provided, which may differ depending on the intellectual right concerned.

3. If improvements are made at the time of the execution of the license agreement, both by the licensee and the licensor, they may as a rule be obliged to communicate them.

Incidentally, if the license is not exclusive, the licensor will be able to further exploit it himself or license it to third parties.

4. The licensee will therefore have to pay (royalties) and the calculation can of course take various forms, but often linked to the turnover that the licensee will be able to realize (offers the possibility to request accounting research).

Also, a certain minimum quota of production and sale is often provided, the more the licensor has an interest in the frequent use of his product.

5. Quality checks will also regularly be included in the contracts, as a consequence the licensee is therefore obliged to inform about the improvements he has made to the work.

6. If these intellectual rights are disregarded by third parties, there is the possibility of seizure of counterfeiting, a claim to strike before the President of the Commercial Court, whereby it is not excluded that the licensee acts on behalf of the licensor (as a rule, the licensor must act, however, the agreement may provide the ability for the licensee to act on behalf of the licensor in counterfeiting or other infringements).

7. The licensee will be bound by a confidentiality clause, and this is certainly the case for know-how licenses, as this is even the essence of the contract.

8. The agreement will then come to an end, as will all agreements in the event of non-compliance with the commitments (e.g. non-payment of royalties), but specifically also due to the expiry of the term of the intellectual right and ending up in the public domain.

A non-compete clause will often still be found, but it will therefore have to be limited in time in order to be valid.