Licensing Agreement

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  • Briefing about agreement details
  • Drafting of Draft Agreement
  • Review of Draft Agreement
  • Changes based on Review
  • Purchase of Stamp Paper
  • Drafting and Handover of Final Agreement on with Stamp Paper

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Documents Required for Registration

As per the law, the documents are required to be submitted by attaching the same to a form named Form 16. The documents to be submitted along with it are: 
  • A document which gives evidence of transfer of patent. 
  • The document affecting proprietorship or creating interest. 
  • Two copies of the assignment certified by the applicant 
  • Any other document which may be required by the controller.

LICENSING AGREEMENT

The term ‘license’ is defined under the Indian Easement Act 1882 as permission granted for a particular activity on a property. A licensing agreement in simple words is a contract made between two parties where the owner of property permits another to use that property under certain conditions. The licensing agreement typically involves a licensor (Property owner) and a licensee (the person who is given the property). The property can be tangible or intangible.

Elements of a standard licensing agreement

Maximum licensing agreements have clauses to cover the issues that arise often in negotiations. Some of those clauses are as follows:
    • Contract Duration: All the licensing agreements have a start date and an end date. Usually, there is a difference between the expectations of parties for the contract duration as per the requirement hence the renewal conditions are also included.
    • Dispute Resolution: This clause discusses terms in situations of disagreement between parties. It mentions where the dispute will be settled and how. For example in case of Litigation or Arbitration, which court will have jurisdiction and others.
    • Sub-licensing: The licensing agreement must state the conditions if there is to be a sub-licensing.
    • Payment Amount: The terms and conditions should be clearly specified in a licensing agreement for the payments i.e. the amount to be paid, currency type, etc.
    • Payment Schedule: The payment schedule should also be properly mentioned. Most agreements usually prefer the amount to be paid in instalments rather than a single payment.
    • Exclusiveness: Certain licensees are willing to pay more if they get to use a particular commodity/innovation exclusively. Hence the agreement must specify that such an innovation/commodity is made exclusively available to the licensee and no one else.
    • Returns and Allowances: A lot of licensing agreements involve physical products. The language must be specific about the returns and other allowances which the licensee is entitled to.
    • Royalty Rates: Certain agreements have the clause of Royalty. The purpose is to mention the exact percentage of the amount which shall be provided as royalty to the licensor.
    • Termination: The termination clause should clearly specify the grounds on which a licensing agreement can be terminated.
    • Rights and Privileges: The granting of a license is a huge risk for both parties. The licensing agreement should specify what are the rights granted to the licensee and the licensor.
       

TYPES OF LICENSING AGREEMENTS

 
  • EXCLUSIVE LICENSES: When a license is given to one person exclusively i.e only he has the right to use the license, such type of licenses are known as exclusive licenses.
  • NON-EXCLUSIVE LICENSES: A non-exclusive license is provided to a number of licensees. In other words, when the right to utilize a particular property, for example, intellectual property is given to multiple people it is said to be a non-exclusive license.
  • SOLE LICENSES: This type of license is similar to the exclusive license but the difference is that the licensee has the sole right to licensing the intellectual property but the licensor also keeps the right to use it. These type of licenses are more expensive than the non-exclusive licenses but cheaper than the exclusive licenses.

Risks of not making a licensing agreement

The dangers are the same for both the licensors and the licensee. With the help of an agreement both the parties know how to approach an intellectual property failing to make one puts the parties in the danger of loss of time and money along with a failure in business negotiation.

Use of licensing agreement

The licensing agreement is made when the licensee wants to obtain the property rights from the licensor. Hence in order to properly and legally do business in the goodwill, royalty and brand value of another, the licensing agreement is required.      

Issues covered under licensing agreement

A licensing agreement covers the following:
  • Copyright
  • Patent
  • Trademark
  • Servicemark
  • Know-How
  • Trade secrets
 

Creating a licensing agreement

Hiring a legal expert is the finest way to handle such an agreement. A person or company can, however, create a general license agreement by following a few steps. It is to be noted that such an agreement must be made very carefully or else it may result in litigation. The following steps should be followed:
  • Get the draft of a licensing agreement
  • Choose your part as the licensor or licensee
  • Define the object of license in the agreement 
  • Decide whether it is to be made exclusive, non-exclusive or sole
  • Settle the amount to be paid (schedule of payment)
  • Add renewal dates (if you want to renew)
  • Add any other details as is required
 

Is it compulsory to register the license agreement?

Yes, as per the patents act 1970 the assignment of a patent is not valid unless a few conditions are satisfied. The conditions summarized are as follows: -
  • It has to be made in writing 
  • It must be duly executed
  • All the rights and obligations of the parties must be properly incorporated into the agreement.
 

Authority for Registration of Licensing agreements

The ‘Controller of Patents’ is the appropriate authority for registration of licensing agreements.  

Registration Process

The procedure for registration can be done online as well as offline (Physical filing).

Registration Fees of Licensing Agreement

E filing
  • Natural persons and start-ups- 1600
  • Small entity, alone with natural persons or start-ups etc. – 4000
  • Others alone with natural persons or start-ups or small entities – 8000
Physical filing
  • Natural persons and start-ups- 1750
  • Small entity, alone with natural persons or start-ups etc. – 4400 
  • Others alone with natural persons or start-ups or small entities- 8800

How Taxolawgy can help you get a licencing agreement?

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