The content of the licence agreement
Because Dutch contract law is based on contractual freedom, parties are free to agree with each other whatever they want. However, we advise to always encounter the following subjects in a license agreement:
- What is licensed (e.g. patents, know-how, trademark, copyrights) under the license agreement?;
- For which products, markets and territories does the license under the license agreement apply?;
- Is the licence (agreement) exclusive or nonexclusive, conditional or unconditional, temporary or perpetual, non-licensable or sub-licensable?;
- What fees (royalties) are paid for the licence under the licence agreement?;
- Licensee's obligations under the licence agreement with respect to, among other things, quality of the licensed products, minimum turnover or royalty payments;
- Liability, warranties and indemnities;
- What is the term of the license and the license agreement and under what conditions can the license agreement be terminated?
Licence fee
In most cases the license will be paid for. There are various ways of calculating the fee. For example, a one-off amount (lump sum), a fixed amount per month/year, but also an amount based on the number of licensed products sold (running royalties), or a combination of these.
Which type of payment is the most obvious depends on the product to be licensed and the relationship between the parties. Fiscal aspects also play a role here. Certainly if licences are granted within one group of companies.
Need help with a License Agreement?
If you would like support in drawing up and negotiating a workable and legally clear licence agreement or in the event of disputes about or termination of a joint venture agreement, please contact us.