A licensing agreement is a contract between two parties – a licensor and a licensee - in which the owner of a brand, patent, trademark, or copyrighted material grants permission to another party to use it. The specific type of licensing agreement and what it includes will depend on what is being licensed and on the conditions of the licensing agreement itself.
What should be included in a licensing agreement?Licensing agreements are straightforward contracts. However, regardless of the specific type of licensing agreement you want, ensure yours contains the elements below to ensure it is robust and works as you need.
A detailed description of what is being licensed. Make it 100% clear what you are licensing. For example, if you are licensing part of a copyrighted work, such as a song or a written text, then be explicit about the specific lyrics or passages you are licensing. To oid doubt, you may also state that the licensing agreement excludes every other part of the song or text.Any limitations of use. While licensing agreements often grant permission to use the licensed work however they see fit, you may clarify how it can and cannot be used. For example, you may grant rights for a song to be used in a TV advert but not for social media advertising. Ensure your licensing agreement reflects whatever conditions you want to attach and he agreed to.Where the licensing agreement applies, are you granting a license for your brand, patent, trademark, or copyrighted material to be used worldwide or only in specific locations?Royalty payments that are due and the payment structure. Are you licensing your work and being paid a one-off fee upfront, or do you need to design a payment schedule depending on how it is used?Whether modifications are allowed, decide whether you want to enable the licensee to make changes to your work.Default conditions. This clause lets you specify how much notice you can give the licensee to terminate the agreement if they fail to fulfill their obligations or contrene things like usage or geographic limitations.Termination. You can include a break clause in your licensing agreement or apply a specific termination date. If you do the latter, you must renegotiate terms and arrange to sign a new one.Applicable law. Note the jurisdiction that will govern the licensing agreement; this will also clarify to which courts any disputes will be escalated.Licensing agreements also typically include confidentiality clauses. If you use a licensing agreement template, ensure your writing fits your needs. If you want to detail specific confidentiality clauses, you can also draw up a separate non-disclosure agreement.
When should you use a licensing agreement?You should use a Licensing agreement whenever you grant permission to another party to use your brand, patent, trademark, or copyrighted material. While Licensing agreements are often associated with giving rights to use a song or film footage, they may also be relevant for partnerships between businesses, where you're granting permission for another company to use your brand in its advertising or to sell your product, for example.
Whenever another party wants to use your intellectual property of any description, it’s a good idea to he a Licensing agreement in place.
Why use a Licensing agreement?There are many reasons why you use a Licensing agreement. As with any contract, using one means you can reduce the likelihood of disputes by being explicit about the terms of use of the licensed thing. In this sense, your licensing agreement makes it easy for the licensee to understand what and how they can use it and for the licensor to check adherence to the agreement if necessary.
When disputes occur, a well-written Licensing agreement should make them easy to resolve, as there shouldn’t be any ambiguity about what conditions apply.
Examples of licensing agreementsOne example of a widespread property included in licensing agreements is the likeness of a movie superhero. Toy manufacturers will often license this to sell action figures, which are much more likely to be bought if they are based on a famous superhero. Another typical example is licensing a song for an advertisement campaign or use in a movie. In the fast food market, there are several companies based on the franchise concept, where a franchise holder licenses the rights to the name, products, and advertisement materials from the leading company.
Special considerationsLicensing agreements should only be entered into by consulting a lawyer well-versed in property law. Every licensing agreement is usually individual, so one should be wary of any standardized-looking or non-written agreements.
Where and how to use a licensing agreementUse a Licensing agreement whenever you need to grant permission to another party to use your brand, patent, trademark, or copyrighted material. Suppose you're a business seeking to use such material that belongs to another party. In that case, you should also insist on a licensing agreement to know you’re legally covered regarding what you want and how to use it.
With Contractbook’s free licensing agreement template, most of your contract is already written for you. You can simply fill in the gaps in our template to quickly create a licensing agreement that works for you or change the other text to reflect better the terms you wish to work within.