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License Agreement Templates
If you were to issue a license to a licensee, make sure to draft a license agreement template that is foolproof and error-free. This requires some degree of competency and skill. Bear in mind that you will grant somebody the rights to use, produce or sell your intellectual property. This alone should give you an idea of the importance of a license agreement.
When do you need a license agreement template?
License agreement templates are great tools, especially for small enterprises to help get their products or services to consumers. It’s a legal document that protects the businessman’s interests. Here are some reasons when to use a license agreement:
- you’d like to provide an individual or an entity the right to use your intellectual property
- you want to make an agreement, either non-exclusive or exclusive with another person to use your property
- you’d like to give usage rights but only in a certain geographical area
- you’d like to give usage rights to another person or entity so they may manufacture your goods
Many businessmen want their products or services marketed on a larger scale. The best way they can achieve this is to enter into a license agreement with another party. The businessman, of course, has sole ownership of the product. He needs the services of another party who takes charge of marketing the product.
Thus, we have a License Agreement which allows the other party to access using the licensed property. There are different types of agreements including software license agreement template, photography license agreement template, non-exclusive beat license agreement template, image license agreement template, and video license agreement.
The basic elements of a license agreement template
There are always two parties involved in a license agreement. The “licensor” is the owner of the intellectual property while the “licensee” is the one granted the license. The licensing agreement template must include the following elements:
- The licensor which refers to the owner of the property
- The licensee which refers to the person who will get the license to use the property
- The property which refers to the copyright, patent, trademark or other property that’s the subject of the license
- The purpose which refers to the reason why the licensee may use the property
- The fees which refer to the amount that the licensee pays to use the property
- The term which refers to the length of time the licensee may use the property
Types of license agreement templates
There are several types of intellectual properties you can use in such an agreement. For instance, a patent on a useful and innovative technological device, invention or creative work that could have potential value or even a copyright on a famous photograph. All these have the potential to earn money.
To market any of these, you must have a license agreement template. This is a legal document where you can set the conditions and terms related to your property. This also gives you proprietary rights which include conditions on how the licensee can make use of the property, who may sublicense it, the amount of the property’s license, and for how long the licensee may use it.
Here is a list of the several types of property which a license agreement can cover:
- Copyright which refers to original work of authorship either in a tangible or written form
- Service Mark or Trademark which refers to recognizable symbols, words, phrases or designs that help users identify products or services of a specific company
- Patent which refers to property right to a new invention
- Know-how which refers to information or an expert skill
- Trade Secret which refers to confidential information about the business
There are also various kinds of licenses to grant on any of the properties mentioned above:
- Exclusive License
This gives an exclusive right to the licensee to use the property in question. Here, even the licensor isn’t allowed to use the property. Once such a license gets granted to a licensee, no other persons can get the license
- Non-Exclusive License
This type of license gives the licensee the right to use the property. However, the licensor can still grant the use of the property to whoever else he wants. This means that for a specific property, there could be several licensees using it simultaneously.
- Sole License
This is similar to the exclusive license with a slight difference. In this type, the licensor maintains the right to use the property but cannot grant additional licensees. However, previous licensees will maintain their right to still use the property.
Considerations to keep in mind when making a license agreement template
There are certain things that you need to consider when making a license agreement template. As aforementioned, making the document takes competency and skill so you can create a document that will be beneficial to all parties concerned, especially for the property owner whose interests needs protection.
Also, remember that the document can get subjected to chances as demanded by negotiations. Consider the following points when drafting your license agreement template:
- The duration of the agreement and the termination procedures
There’s a need to make a decision about when the agreement starts and ends. Also, include the terms by which the contract can get terminated. Most contracts allow a couple of inconsistencies if they were quickly resolved and it will be up to the licensor to decide the circumstances which lead to the termination of the contract.
- Exclusive, non-exclusive or sole license rights
You need to define what rights to grant the licensee. Sole licenses are rarely granted because most people prefer to keep on improving and developing their products.
- Geographical restrictions
There are some types of property which have geographical applications. For instance:
Some licensors prefer to restrict the use of their property in their locale to prevent potential competition
Some licensors want to grant licenses to people outside of their own region, this is especially true with franchises.
Some agreements can also include a non-compete clause.
- Usage of the property
There’s also a need to define clearly how the licensee can utilize the property. Do they have rights to sell it or can they modify the property? If so, does the licensor have the rights to the modified version? Such questions and others need to be clearly discussed.
- Calculation of the royalties
This is the section where you outline the payment for the rights of the property. Again, you need to answer a number of questions. Will the licensor settle for a lump sum? Will you base the payment on a certain percentage or amount per item?
Licensors often resort to a performance clause which stipulates that the licensee needs to meet a performance level or he loses the rights. Moreover, some licensors have an outline on what’s expected with regards to reporting and more.
- Modification of the property
Companies often make provisions on what happens should the licensee decide to alter or improve the property of the licensor. In such a case, the latter can define what type of alterations to allow.
Should the licensee make changes, the agreement should also state that the licensor keeps the rights to the upgraded version. The licensor should also consider how much it costs to change the product into an entirely new one.
- Will you use arbitration to settle any disputes?
In case of disputes or arguments, most will opt for arbitration rather than going to court. Arbitration is the settlement of a dispute between parties to a contract by a neutral third party, the arbitrator, without resorting to court action. Hopefully, the parties can arrive at some compromise but the licensor should always prepare himself in case situations turn out for the worse.
A warranty is a guarantee that you’re going to provide the property you promised. For instance, a software should do exactly what it’s meant to do and shouldn’t have any errors. In the case of physical property, the licensor should replace it with an exact copy, one with no damages whatsoever.
Most types of property lose their value when everyone has it. The licensor can protect his property by asking the licensee to agree to a non-disclosure clause. It’s most likely that he will agree to this because it’s in the best interest of both parties to protect the licensed property.
How to get your property licensed?
You must first have a license before entering into a license agreement. The first thing you need to do, which is often neglected because of the excitement about the product or idea, is to spend some time researching similar products and ideas. This can help facilitate the licensing process.
There is also a need to keep your asset protected until you can get a license for it. This is to ensure that there will be no copycats to your original idea or product. Next, is to apply for a patent, a trademark or a copyright. This depends on the type of product you need the license for. There are many trademark services and property resources which can help you in this process.
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