Licence agreements

What is a licence agreement?
A licence agreement is an agreement between two parties in which a holder of a right (licensor) gives another business or person (licensee) permission to use the right against payment (licence fee). A licence agreement relates to a transfer of use and not ownership. A licence agreement only awards the licensee the right to dispose of the invention in the way set out in the terms and conditions of the licence agreement.

is an agreement in which the licensor is obligated not to give an equivalent licence to others. In other words, licensees receive an exclusive right to use the invention within a given area.

NON-EXCLUSIVE LICENCE is an agreement in which the licensee is permitted to use the invention, but does not have an exclusive right. The licensor is still entitled to exploit the right and to grant licences to others.

Should the licence agreement be exclusive or non-exclusive?
An exclusive agreement can be an advantage if you want to enter a close cooperation with a partner, while a non-exclusive agreement can be an advantage if you want to spread your product/technology to as many competing licensees as possible.

What is the duration of a licence agreement?
There are no rules for how long a licence agreement runs. The parties agree the term of the agreement themselves. Most often, the agreement is non-terminable for a defined period, after which the agreement can be terminated with a notice period. The length of the notice period is dependent on the business assessment of the parties and is therefore established in the specific agreement between the parties.

Which geographic areas are covered by the licence agreement?
One of the questions that most often leads to disagreement is the geographic area covered by the agreement. It is therefore important to have a provision in the agreement to decide this. You should ensure that the provisions on geographic coverage here comply with competition rules. It could be a particularly good idea to obtain legal advice on this issue.

By clicking on the menu to the right, you can read more about when it is a good idea to enter a licence agreement for a patent, trademark and design respectively.