7 Licensing Contract Requirements You Should Know

June 10, 2022    commerciallawyersinperth
7 Licensing Contract Requirements You Should Know

There are multiple ways of categorizing various types of licensing that exist. The type of agreement that you will choose will depend on multiple factors, and these factors may include the parties involved.

It might even depend upon the location of the licensor and the licensee. The agreement may even depend upon the industry in which the product is licensed. You can contact commercial lawyers in Perth to know more about the licensing contract requirements.

1. What Is A Licensing Agreement?

A licensing agreement is a type of legal contract. Here, a party that owns specific intellectual property grants the second party the right to use that IP for specific purposes in return for a payment or other benefits.

Licensing agreements need to lay out the scope of the license granted and all the limitations to using. You can know more about this licensing agreement with the help of a commercial contract lawyer.

2. What Is Included In A Licensing Agreement?

The following are some important points that need to be included in a licensing agreement:

– The Licensor(S) And Licensee(S):

The licensor is the party granting the license, while the licensee is the party that is receiving it.

– The Copyrighted Material Or Patent Being Licensed:

This needs to be explicitly identified, including any associated trade names, trademarks and service marks.

– The Purpose Of The License:

This needs to be specific and outline what the licensee can do with the copyrighted patent or material.

– Geographical Limitations:

If the licensee is only authorized to use the copyrighted patent or material within specific geographical boundaries, it needs to be stated in the agreement.

– Rights Of Licensor:

Licensors need to retain all rights that are not expressly granted to the licensee, including ownership over derivative works made by using their copyrighted patent or material.

– License Duration:

The license duration needs to be identified in the agreement.

– Termination Clause:

This section will inform how and when every party can cancel or terminate their licensing agreement. This is usually within a set length of time for advance notice.

– Compensation:

The licensor needs to outline what form of payment the licensee is required to make in return for using the copyrighted material or patent. This can be a one-time fee or an ongoing royalty stream.

With the help of commercial contract lawyers in Perth, you will be able to know more about the clause. Licensors may also have the right to cancel licenses if they believe it is important to protect their original work.

This is usually reserved only for cases involving extreme infringement by users against terms given in the agreement. Licensing agreements are usually never-ending unless agreed upon by both parties.

3. What Are The Different Licensing Agreements?

The various licensing agreements are as follows:

– Patent Licensing:

This type of licensing covers both innovation and science. Patent licensing agreements allow a patent owner to let someone use their patent. Patents cover technological and scientific advancements like new inventions.

Their licensing agreements are the legal documents that allow a patent owner to grant other parties the right to use their patent. Other than this, patent holders license their inventions for manufacturing and wider distribution.

– Trademark Licensing :

Trademark means commercial sources such as slogans, brand names and logos. A trademark licensing agreement allows the trademark owners to let others use their IP. Trademarks are identifiers of commercial origins, particular brand names, slogans and logos.

– Copyright Licensing:

Copyrights are used for multiple creative works of the intellectual property are used for music, paintings, movies and characters. Besides, copyright licensing agreements are often used in distributorships or consumer goods.

– Trade Secret Listing:

Trade secrets are not registered with the government. Unlike copyrights, patents and trademarks that are valuable when registered with the federal government, trade secrets are protected by being a secret.

4. Types Of Licensing Agreements Based On Factors That Impact Them

There are multiple types of licensing agreements based on some factors that influence licensing agreements:

Based on the number of licensors and licensees involved-

– Unilateral Licensing Agreement:

A unilateral licensing agreement is made between a licensor and licensee. Licensors usually favour unilateral licensing contracts as they can make money without sharing it with others.

This licensing agreement is also a favourite of licensees, as in this type of agreement, they only need to deal with a single licensor.

– Bilateral Licensing Agreement:

With the help of a lawyer, you can understand this type of license agreement. In a bilateral licensing agreement, an agreement is made between two licensors and licensees.

Licensors love this type of licensing agreement as they share their profits with other licensors. Licensees like them only have to deal with two companies instead of four.

– Multilateral Licensing Agreement:

This type of licensing agreement is not common, but it has three or more licensors and licensees who agree to license a product under certain terms and conditions.

Licensors love this type of licensing agreement as they can share their profits with other licensors. They can improve their market in impossible ways when dealing with a single licensor. Licensees like them as they do not need to deal with more than three licensors.


  • Perpetual– A licensee purchases the right to use the IP once and then uses it for a lifetime.
  • Term– Either the licensee pays a one-time fee for a specific term, or they can also pay-per-use.

5. Type Of Relationship Between Licensor And Licensee

– Exclusive Licensing Agreement:

When the copyright holder grants an exclusive license to use their copyrighted patent or material, they give up all the unreleased rights for that specific purpose.

When they do this, it allows the licensee to be the only user of the materials for that specific purpose. You can learn more about this agreement from license agreement lawyers.

– Non-Exclusive Licensing Agreement-

The licensor might be licensing out the IP to many licensees. This type of agreement is used particularly when the licensor fully exploits their work and makes it available to as many potential users as possible.

– Some Licensing Agreements:

In this type of licensing agreement, the licensor needs total control over the copyrighted material or patent that is being licensed. Licensors that grant exclusive licenses do so to a single company or individual for some time.

They also grant the license to people who are within geographical boundaries. In this case, the licensor retains all rights not granted to the licensee.

6. Important Points That Need To Be Considered

You need to consider the following points, and those are:

  • An intellectual-property attorney needs to provide the terms of any copyright license. They can help you to obtain all the necessary rights while at the same time protecting your interests against unauthorized use.
  • The licensor must retain rights over derivative works created by users under the original copyright licenses. Licensors also might need to offer sublicenses under the existing copyrights. This will help to further incentivize the licensee’s investment into the licensed property.
  • Licensing agreements are mainly used when an intangible property like trademarks, patents and trade secrets is licensed.
  • Sometimes, license agreements are also referred to as the “terms and conditions” when the copyright owner has to use an online licensing program to offer licenses directly to its users.
  • Licensing agreements always need to include important terms such as a licensee, licensor, types of license, the scope of the license, termination clause, compensation and the governing law.
  • Licensors need to retain all their rights that are not granted to the licensee under an exclusive or non-exclusive license agreement. Licensors may choose to reserve specific rights over their copyrighted material or patent if they believe it is necessary for protection.

Licenses can also be everlasting if both parties do not agree. In such cases, a lawyer can help to resolve such cases.

7. What Are The Advantages Of Licensing?

Licensing agreements have multiple advantages for both licenses and licensors; commercial contract lawyers in Perth can help you know more about them.

The benefits are as follows:

  • Income– Licensors can generate income from their copyrighted material or patent without entirely exploiting it themselves.
  • Control– Licensing agreements allow the licensors to control how their patent or copyrighted material is used.
  • Access– Licensees can easily access copyrighted material or patents that they would not be able to use.
  • Protection– Licensing agreements provide a level of protection for licensors in the event of copyright infringement by the licensee.
  • Long-lasting– Licensing agreements are everlasting unless it is agreed upon by both the licensee and the licensor.

How We Can Help?

With the help of license agreement lawyers, you can protect your intellectual property while also optimizing revenue. You can contact Commercial Lawyers Perth, WA; their lawyers have experience in negotiating and drafting licensing agreements that can benefit your company a lot.

You can use their services as their lawyers are knowledgeable and skilled in using click-wrap and shrink-wrap licenses. They can also give you the best business advice; they are specialized in such works and can advise you on possible pathways for best outcomes.

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