When it comes to using the term “license”, it’s necessary to figure out where and how you want to use it. With two meanings, it enables users to apply it with respect to the purpose.
You could either be using it as a common term like that of a driver’s license or in terms of commerce and business.
However, a license refers to a permit given to use or own something by an authority. For this, it’s essential to have a legal license agreement template that explains each and everything in detail to avoid confusion in the future.
What Is a License Agreement?
A license agreement or licensing agreement is known as a deal between the owner/creator (licensor) of a trademark, patent or brand and a person (licensee) who is willing to get those trademarked or patented goods/ services in possession.
The license gives permission to that person and makes him/her liable to honor the guidelines as mentioned by the licensor. One of the important rules in the license agreement is to make financial arrangements against using the license.
Normally, two types of assets can be licensed:
- Intellectual property: copyrights and trademarks
- Technology: like patents to use services/products or computer apps/software
Licensing agreement is one of the ideal ways for a company, who has a great idea of a product but cannot manufacture it, to let someone else do it for them.
In other words, this type of agreement has a great potential to provide return on investment (ROI) with higher chances of getting successful.
How a License Agreement Works?
As soon as a licensing agreement is created, it imposes obligations on the licensor to provide intellectual property rights to the licensee either by brand name, product creation knowledge or licensor’s technology.
In exchange, the licensee is liable to pay an upfront or royalty fee so as to ensure the authority to use it by the licensor. Here, the fact is that the royalty fee is the ongoing payment to the licensor against the use of his/her intellectual property.
Royalties can be paid in a number of ways, including holding the copyrights, giving share in the annual revenues on sales and selling of copyrights in exchange for a stream of revenue.
Who Needs a License Agreement?
In the most basic form, a license agreement is between two parties - one is willing to sell the secrets of their products/services along with the right to use them, while the other is interested to utilize them for good.
But, the thing that makes each agreement different from the other is its nature of use. Even, the license agreement templates are different based on the extent of the use of products/services.
So, it’s necessary to figure out the nature of the agreement before figuring out which licensing agreements template would work the best.
- Exclusive License: This license agreement is created when it is only intended for the intellectual property. Licensor cedes the rights while licensee has to bear more cost.
- Non-exclusive License: There will be more than one licensee to use the intellectual property, thereby making it necessary to follow a different licensing agreement template.
- Sole license: One Licensee has all the rights of the intellectual property due to which, it costs more as compared to non-exclusive one but, if of course, cheaper than exclusive license.
A bad or poorly performing licensee can result in a product or service that could have developed a good cash flow being useless while other competing products come to dominate the field.
Further, most licensees need guidance and assistance from the licensor, so inevitably more than “cashing the checks” is involved. Many inventors have a dream of licensing their product to some multinational that will simply pay a great deal of money over time.
The average license involves two relatively small businesses who have to work together to make the process successful.
What Are Included in a License Agreement?
When it comes to the elements, you can take a look at any license agreement sample to get to know about the following in a better way:
- Length: There must be a start and end date along with renewal rules.
- Dispute resolution:Dictates whether the parties solve their disagreement in arbitration or in a court.
- Exclusivity: Only one licensee has the right to use innovations whereas, it depends upon the licensor if he/she wants to earn with an exclusive license or a non-exclusive one.
- Minimum sales guidelines: Look at the licensing agreement sample to see how a licensee should meet sales goals as prescribed by the licensor.
- Oversight: Licensor can protect his/her innovations, brands and trademarks.
- Quality control: The licensee must prove quality standards of the products/services as well as the premises.
- Payment: It is an important part of the licensing agreement template that should be clearly mentioned along with the variable or fixed dates. Payments depend upon the sales criteria.
Now that you are aware of the various aspects of licensing agreement, get in touch with CocoSign to create one for your business deal. It’s high time that you visit our website and find an appropriate sample license agreement to create your own or let us do it for you.
State of ______________
This License Agreement (this “Agreement” ) is made as of the ______ day of _______________, 20______ (the “Effective Date” ) by and among/between:
Owner(s): _____________________________________________, (collectively, “Owner” ) and User(s): _____________________________________________, (collectively, “User” ). The Parties agree as follows:
1. License. Owner hereby grants to User (Check one) ☐ an exclusive ☐ a non-exclusive license to use the following items of intellectual property (the “Licensed IP”):
(A) Name/Title: ________________________
(B) Name/Title: ________________________
(C) Name/Title: ________________________
(D) Name/Title: ________________________
solely for the limited purposes of _________________________________________________________. User is authorized to use the Licensed IP (Check one) ☐ in the following regions: __________________ ____________________________________________________________ ☐ worldwide (the "Territory") .
Nothing herein obligates User to exercise the rights granted in this Agreement.
2. Consideration. As consideration for the license granted and described in this Agreement, User shall pay to Owner the following fees and/or royalties:
Payment shall be made within __________ days of the due date. If any payment is not made within __________ days after the due date, Owner may charge: (Check one)
☐ Interest of __________% per month charged.
☐ A late fee of $____________ for each month past due.
☐ Do not specify.
In the event any payment is collected at law or through an attorney-at-law, or under advice therefrom, or through a collection agency, User agrees to pay all costs of collection, including, without limitation, all court costs and reasonable attorney’s fees.
3. Right to Sublicense. User has no right to grant sublicenses to any third party unless Owner provides its approval in writing. Any approved sublicense is subordinate to, and must conform to the terms and conditions of this Agreement, and will not include the right to grant further sublicenses.
4. Affiliates. (Check one)
☐ Sublicenses may NOT be granted to Affiliates of User without the express written permission of Owner.
☐ Sublicenses may be granted to Affiliates of User without the express written permission of Owner.
Any sublicense to an Affiliate must conform to the terms and conditions of this Agreement, and will not include the right to grant further sublicenses. “Affiliate” shall mean an entity controlled by, under common control with, or controlling User, where control is denoted as having fifty percent (50%) or more of the voting power (or equivalent) of the applicable legal entity.
5. Copies. User shall not make copies of the Licensed IP, except as expressly approved by Owner. For any authorized copy made of the Licensed IP, User must accurately reproduce the Licensed IP with the proper notices as directed by Owner from time to time.
6. Intellectual Property Notice and Markings. In no event may User remove any copyright or intellectual property notice, proprietary legend, trademark or service mark from any materials. Owner may require an appropriate legal notice or legend, as required by law or established by Owner, be placed on all products, packaging and promotional materials.
7. Quality Control. (Check one)
☐ User agrees that any use of the trademarks included in the Licensed IP must comply with all quality control standards and usage guidelines as may be reasonably established by Owner, and must generally conform with good trademark usage. Owner may reasonably request that User deliver representative
samples of any products or materials containing the Licensed IP to ensure all quality control standards
and usage guidelines are being maintained and adhered to.
☐ Not applicable.
8. Ownership of Licensed IP. User agrees that, subject to the rights and licenses granted herein, Owner is, and will remain, the sole and exclusive owner of all right, title, and interest, throughout the world, to all Licensed IP and any copies of the Licensed IP.
9. Confidential Information. “Confidential Information” shall include any confidential and proprietary information developed or acquired by Owner including, but not limited to, technical and non-technical data, formulas, patterns, source and object codes, compilations, devices, methods, techniques, drawings, processes, trade secrets, copyrights, know-how, ideas, concepts, customer lists, pricing structure, sales information, business records and plans, and other intellectual property related to the Licensed IP and/or Owner. User agrees to hold any Confidential Information of Owner obtained in the transactions contemplated by this Agreement in the strictest confidence, and to not permit unauthorized access to or unauthorized use, disclosure, publication or dissemination of Confidential Information, except in conformity with this Agreement. User will comply with all laws and regulations that apply to the use, transmission, storage, disclosure or destruction of Confidential Information. User shall ensure that its employees, agents, representatives, and contractors are advised of the Confidential Information and are precluded from taking any action prohibited under this Agreement. Ownership of the Confidential Information shall remain solely with the Owner.
10. Exceptions to Confidential Information. Confidential information shall not include information that ( 1) is or becomes publicly known and available through no fault of User; (2) is or was lawfully obtained from a third party that has the right to make such a disclosure; (3) is disclosed with the Owner’s prior written permission and approval; (4) is independently developed by User without the use and benefit of any of the Confidential Information; or (5) is required to be disclosed by operation of law.
11. Survival of Confidential Information. The obligation of confidentiality will: (Check one) ☐ Extend for a period of __________ years after the termination of this Agreement. ☐ Survive termination of this Agreement.
12. User’s Diligence. User will cooperate to diligently protect the Licensed IP. User agrees to promptly notify Owner in writing of any unauthorized use, infringement, misappropriation, dilution, or other violation or infringement of the Licensed IP of which User becomes aware.
13. Legal Action. Owner will maintain sole control and discretion over the prosecution and maintenance with respect to all rights, including all intellectual property rights to the Licensed IP. Owner will have the primary right, but not the obligation, to bring and control any litigation, enforcement action, proceeding, or other legal action (collectively, the “Action” ) against any unauthorized use, infringement, misappropriation, dilution or other violation of the Licensed IP. User agrees to cooperate with Owner in any Action that Owner may undertake to protect the Licensed IP, and upon Owner ’s request, User will execute, file, and
deliver all documents and proof necessary for that purpose, including being named as a party to the Action as required by law. Owner will be entitled to retain the entirety of any award arising from any Action. User may participate and be represented in any Action by its own counsel at its own expense. User will have no claim of any kind against Owner based on, or arising out of Owner ’s handling of, or decisions concerning, any Action, settlement or compromise.
14. Mutual Representations and Warranties. Each party represents and warrants that: (a) it has the power and authority to enter into this Agreement, and the execution, delivery, and performance of this Agreement and the transactions and other documents contemplated have been authorized by the parties; and (b) this Agreement has been executed and delivered by each party, and constitutes a legal, valid, and binding obligation of the party, fully enforceable against the party in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium , and similar laws of general applicability relating to or affecting creditors’ rights, and general equity principles.
15. Owner’s Representations and Warranties. Owner represents and warrants that: (a) Owner owns and/or controls the rights granted to User in this Agreement and Owner has the right to grant such rights and to enter into this Agreement; (b) to the best of its knowledge the Licensed IP does not infringe upon or violate (i) any copyright, patent, trademark, or other proprietary right of a third party or (ii) any applicable law, regulation, or non-proprietary right of a third party; and (c) Owner has no knowledge of any claim which, if sustained, would be contrary to Owner’s warranties, representations, and obligations contained in this Agreement.
16. No Warranties. User acknowledges that: (a) Owner is providing Licensed IP to User on an “as is” basis without warranty of any kind; (b) Owner has not prepared or modified the Licensed IP to meet any specific requirements or specifications of the User; (c) Owner makes no representations or warranties as to value, use, sale or other exploitation of the Licensed IP by the Owner or any third party.
17. Laws and Regulations. User represents and warrants that User will comply, and ensure its Affiliates comply, with all local, state, federal and international laws and regulations relating to the development, manufacture, use, sale, importation and exportation of Licensed IP.
18. Indemnification by Owner. Owner will under no circumstances, be obligated to indemnify, defend, or hold User, its Affiliates, or respective representatives, officers, directors, stockholders, employees or agents harmless from any liability, claims, demands, causes of action, judgments, damages, or expenses (including reasonable attorneys’ and experts’ fees and costs) arising out of or as a result of User’s or its sub-licensees’ use of the Licensed IP under this Agreement.
19. Indemnification by User. User must indemnify, defend, and hold Owner, its Affiliates, and its respective representatives, officers, directors, stockholders, employees, and agents harmless from all liability, claims, demands, causes of action, judgments, damages, and expenses (including reasonable attorneys’ and experts’ fee and costs) arising out of or as a result from User’s or its sub-licensees’ use of the Licensed IP other than any third party claims covered by this Agreement. User will not be obligated to defend or hold harmless Owner in the event that any claims, demands, causes of action, judgments, or expenses arose out of willful misconduct, gross negligence, or bad faith by Owner.