Checking the license agreement

Nov, 02 2021

Contents:

Usually, a license agreement is concluded when the parties “share” certain rights, for example, the author of a technical project or industrial model – transfers the rights to use the results of his intellectual activity to others in exchange for a certain reward.

License agreement concept

A license agreement is a document that creates a contractual relationship between the recipient of the license (licensee) and the licensor of the rights to the product. The agreement usually contains the terms of the permitted intellectual property, the zone in which the license will be valid and the terms of the remuneration providing for a certain amount of money or other compensation. Therefore, there are two parties to the transaction:

  • Licensor;
  • Licensee.

In addition, the license agreement should specify the procedure for using the result of intellectual property or means of individualization, the method according to which the licensee is obliged to submit reports on the use, and other commercial terms for the execution of the agreement agreed by the parties.

A license agreement under which an individual or legal entity acquires from the copyright holder, for a certain fee, an indestructible or exclusive right to use objects of intellectual property and means of individualization subject to protection, is licensed.

Types of license agreements

Despite the fact that licenses are issued for an invention, for a utility model, for know-how, for an industrial design, and so on, it is still generally accepted that there are only two types of licensing agreements:

  • Simple license (when the owner of the rights can issue similar licenses to third parties);
  • Exclusive form of license (when no licenses will be issued to third parties).

Checking the license agreement

In preparation for the conclusion of such an agreement, one should study the standard provisions of civil law agreements. But there is a list of conditions to which it is recommended to pay closer attention:

  1. Verification of standard essential conditions. Consider the subject of the contract most carefully.
  2. Specify what type of license will be issued to the licensee.
  3. Review the transfer royalties scheme.
  4. Analyze the terms of early termination of the agreement.

The first step in closing a deal is checking the license agreement. After studying the text of the license agreement, it is necessary to analyze it. The right to use remuneration for intellectual activity and means of individualization in itself entails its state registration.

The licensor gives the right to another person – the licensee – to use his intellectual activity or means of individual identification in a certain territory and requires a certain payment in exchange for this right.

To make a decision on concluding a license agreement, you need to familiarize yourself with the terms of the transaction and check the license agreement.

It is necessary to take into account when analyzing the document that the licensee undertakes to bring income to the right holder from the use or sale of the result of intellectual activity or means of individualization, the right holder himself undertakes to refrain from any possible actions that may damage the proper use and sale of the subject matter of the license.

In this case, the licensee must pay the licensor the remuneration, which is stipulated by the agreement, within the prescribed period. The Licensee must also reimburse the Licensor for damage and losses that he will incur as a result of the unilateral termination of the contract by the Licensor.

Sublicense agreement

In general, the parties of a license agreement enter into a sublicense agreement. The Civil Code provides for the possibility of concluding a sublicense agreement, according to which the right to use the result of intellectual property or means of individualization is presented to a third party. The main condition is the availability of a written consent to carry out the activities of the licensee. It should be remembered that the licensee is responsible to the licensor for the actions of the sublicensor.

In this case, three parties are already involved in the process:

  • Licensor;
  • Licensee;
  • Sublicensee.

The licensing agreement is the first step in the actual procedure for securing the rights of inventors and designers to their creations. Fundamentally, its first principle is that any of the parties to the contract cannot use the procedure for issuing licenses for other people without first obtaining permission from this person or his heirs.

An unlimited license is a license that gives the licensee the right to use the result of intellectual property or a means of individualization in accordance with the established conditions unlimited in the territory, including transferring this rights in turn to other persons.

If you want to obtain the right to use the results of intellectual activity in the Russian Federation, you must obtain the prior consent of the owner of exclusive rights or obtain a compulsory license. This is when the copyright holder gives permission for you to use the result of intellectual activity, while he himself does not need to use it, or when the copyright holder does not take the necessary measures to prevent you from using this product.

In addition to the possibility of using intellectual property with its voluntary recognition between the parties, there is the possibility of using the result of intellectual work as a compulsory license issued by a court decision. Such a license is issued on the basis of an application for the issue of such a license and on the conditions provided for in a court decision. Checking the license agreement at the initial stage will avoid courts or any other conflict situations.

Validity

The license agreement is a legally significant document. Consequently, it is valid and binding on both parties – both the performer and the licensee, even if one of the parties fails to fulfill its obligations under the contract. The term of the license is set in the contract.

This provision of the contract assumes that its validity period will not be valid until all participants have received from them the forms of acceptance signed by them. This allows one or more parties to unilaterally refuse to sign the contract if its content is changed without their consent.

Conditions to be stated in the license agreement

It is believed that at the time of signing the license agreement, the parties have already agreed on the essential terms. The license agreement sets out the rights and obligations of the parties in relation to the use of intellectual property or a specific product. It is necessary to describe the products that can be manufactured using intellectual property.

You can highlight the main conditions that must be present in the license agreement:

  • Description of the intellectual product itself that is transmitted;
  • An enumeration of the ways in which the licensee will sell this product;
  • Terms of remuneration.

It is imperative to include a clause according to which signs for registering a trademark must be present in this agreement. Do not forget that if a person plans to purchase a license for an already registered trademark, then this agreement must be accompanied by a certificate of registration of this trademark.

If the parties to the license agreement have not agreed on the validity and period of validity of the right to use, then it is determined by the specifics and geographic location of the place and period of validity of the patent.

The license agreement stipulates the conditions for the use of intellectual property or any specific product. The rights and obligations of the parties with respect to the reproduction, use or distribution of this product must be clearly stated. Attention should be paid to the spelling of the symbols.

Author of the article
Checking the license agreement
Valentina Khlavich
Managing Partner
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