Monday, May 05, 2008

Licensing [in simple words]

A license is a grant by an intellectual property owner to another party [the licensee] of the rights to use the intellectual property. A license may be royalty bearing or non-royalty bearing [as in cross-licenses], and a royalty-bearing license may be either paid-up or bear a running royalty, where the royalty is based on the sales of the licensed goods or services that are based on the intellectual property.

It is important to remember that licensing constitutes the most common mechanism for commercialisation of research and proprietary technology:
Licensing is accomplished by identifying an enterprise that is well placed to commercialize the technology successfully and negotiating an agreement for the enterprise to proceed with the commercialization. The resultant license agreements usually provide for licensor compensation in the form of royalties and fees and occasionally equity.

The parties to Agreement should agree on the procedure of legal protection of results arising from the project implementation, allocation of rights to the intellectual property, licensing procedures in the Parties’ territory. This checklist details the requirements sequentially to enable a through and systematic review.

The party licensing the intellectual property must actually own it and thus have the right to license it. The persons executing the license on behalf of each party must have the authority to commit their respective parties to a license.

Generally, a licensing contract will begin with the identification of the contracting parties, followed by clauses that state facts about the reason for the formation of the contract as well as the intentions and goals of the contracting parties. Next, the terms used in the agreement are defined.

Following the definitions is the grant, which identifies the licensed rights or properties and details the limits on their use. Next are representations, which are statements as to the current state of affairs, and warranties, which are promises, by one party, that certain statements are true and will remain so. “Termination provisions” detail the responsibilities of each party at the end [termination] of the license. Finally, “miscellaneous terms” may include most favoured nations clauses, choice of laws provisions, arbitration provisions, and nonwaiver clauses.

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