Licensing - A Checklist

Licensing – Some questions to ask before entering into an Agreement:

• Is the license exclusive, i.e. granted to only one person, or non-exclusive?
• Can the licensee sub-license?
• Are there any limitations to the license e.g. geographic or territorial? minimum sales requirements? mimimum production requirements etc?
• What is the amount, frequency, and form of payment, e.g. either lump sum or by way of royalty, or both, or other payment schedule?
• Who pays for prosecution and maintenance of any registered IP rights (patents, trademarks, designs)?
• How are any developments, modifications or improvements to be protected and who owns them?
• Who is responsible for filing for intellectual property rights for further improvements and is this dependent on territory?  Whose name will such applications be made in?
• Are there specific clauses relating to the co-operation of the licensor in matters relating to the IP, such as infringement or enforcement?
• Who pays for matters such as preparation of the license, recordal of licensee etc?
• Is there a required commitment on the part of the licensee to fully exploit the invention?
• Does the license contain a clause which allows for the license to be cancelled if the IP is not being used?
• What is the term of the license?
• Is there a right to renew?
• What are the conditions of termination?
• When are royalty or other payments due?
• If sub-licensing is permitted, what payment does the licensor receive?
• What information is the licensee committed to providing to the licensor?
• What happens if the IP under which the license is granted is refused, infringed, opposed, revoked or other?
• Is copyright a consideration?
• Does the licensee agree not to challenge the validity of the patent?
• Does the licensor agree to provide essential “know-how”?
• What are the provisions for any “hardware” in the event that the license is terminated?
• How will any disputes be resolved?
• What happens in the event of death of one of the parties?