Intellectual Property License Agreement

An Intellectual Property Licensing Agreement is a legal document under which the intellectual property ("IP") rights owner, known as "Licensor" authorizes another person or entity to use such rights, known as "Licensee", in exchange for an agreed payment, known as a "Royalty".

Under the License Agreement, the Licensor retains the ownership of IP rights while granting permission to the Licensee to utilize the IP in a particular manner for a limited period. Licensing Agreement is different from that of Assignment Agreement, under Assignment Agreement, the Licensor gives away all the rights over the IP rights for a fixed amount or consideration and will not be entitled to use such IP rights or receive regular Royalty payments on it.

The Licensing Agreement can be of three types:

• Exclusive License: under this type of License only the Licensee will be entitled to use the IP rights. The Licensor will be barred from using it and giving the license to any third parties during the license period.
• Sole License: under this, both the Licensor and Licensee will be entitled to use the IP. Such rights cannot be transferred to any third parties, and the Licensor will be barred from issuing any new license during the term of the Agreement with the Licensee.
• Non-Exclusive License: This is the commonly used method of licensing. Under this, Licensee will be allowed to use its rights and Licensor will be free to issue new licences to any third parties.
  
  

How to use this document

This Agreement can be used for any types of Intellectual Property Licenses including patents, copyright, trademark, and designs.

This Agreement covers major provisions of the Licensing Agreement, including the following:

• Parties: The type and details of the parties i.e., Licensor and Licensee are included under this Agreement. The Parties can be an individual, company, partnership, LLP and so on.
• Description of licensed property: the details about the licensed property can be mentioned under this Agreement. If required, a detailed description can be mentioned under Schedule-A to the Agreement.
• Grant of rights: defines the scope of rights and limitations of a licensed property. This included a geographical area to which the use of IP is restricted and the purpose of issuing the License to the Licensee.
• Sub-Licensing rights: it will clarify whether the Licensee is allowed to sublicense the Licensed Property to any third parties and if allowed, what are the restrictions or conditions on such sub-licensing.
• Modifications: it includes, whether the Licensee is allowed to make any modifications to the IP and if allowed, who will be having rights and ownership over any derivatives of such modifications.
• Consideration: It includes the method of calculation of Royalty payable by the Licensee, how it will be paid to the Licensor and who will bear the cost of GST (Goods and Services Tax) payable on such transaction. This clause also includes the penalty for any late payment of Royalty by the Licensee.
• Warranties: The warranties or promises by both the Licensor and Licensee with regard to their capacity to enter into this Agreement, ownership over the IP rights, compliance with the terms of this Agreement and laws are included. If required, such additional warranties can be mentioned under this clause.
• Term: The period for which the License is valid and how and in what circumstances the Licensor and Licensee can terminate this Agreement, notice period of termination of this Agreement, and so on are included under this clause.
• Confidentiality: Under this, both parties agree not to disclose confidential information including trade secrets, know-how, plans and so on to any third parties. If required, a separate detailed non-disclosure agreement can be signed between the parties.

Once the details are filled in, this Agreement can be printed on non-judicial stamp paper of value prescribed by the concerned state where this Agreement is executed. The Agreement has to be signed by two independent witnesses who are not a party to this Agreement.

Applicable Law

Licensing of copyright: under the Copyright Act, 1957, the owner of the copyright can license the rights in copyright in writing. For granting licenses in respect of literary, dramatic, musical and artistic works in cinematography films and sound recordings can only be carried out through a registered copyright society.

Licensing of trademark: under the Trademarks Act, 1999, the licensing needs to be in writing. Only those license agreement registered with the Registrar will have protection under this Act.

Licensing of patents: under the Patents Act, 1970, the licensing agreement has to be in writing and registered with the Controller of Patents.

Licensing of design: under the Designs Act, 2000, the licensing agreement shall be writing and registered with the controller within 6 months from its execution.

A License Agreement is a contract and general principles of the Indian Contract Act, 1872 will be applicable.

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