License Agreement

A license agreement is a contract executed between the owner of a property and another party that is permitted to use said property under conditions specified in the agreement.

How it works

A property owner can allow other parties to use the property under a set of rules specified in the License Agreement. License Agreements are mostly used for intellectual property like copyrights, trademarks, and patents.

What Is a License Agreement?

A License Agreement is a contract between two parties (the licensor and the licensee). The licensor or owner of the property grants the rights to the licensee under certain conditions.

Other Names for a License Agreement

Depending on your state, a License Agreement may also be known as:

• License Contract
• Agreement on Licensing
• Licensing Arrangement
• Licensing Deal
• License to Use

Who Needs a License Agreement

To use any licensed material legally, an individual or organization must first obtain a Licence Agreement. The owner of the content gets to define the limits for using the license and any compensation required.

Why Use 360 Legal Forms for Your License Agreement

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Create your own documents by answering our easy-to-understand questionnaires to get exactly what you need out of your License Agreement.

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Laws vary by location. Each document on 360 Legal Forms is customized for your state.

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All you have to do is fill out a simple questionnaire, print, and sign. No printer? No worries. You and other parties can even sign online.

How to Create a License Agreement with 360 Legal Forms

Creating a Licence Agreement contract can require a lot of research and time, and even then, there is a chance you will miss certain things. You can save yourself the time and potential losses by using 360 Legal Forms to generate the document.

Let 360 Legal Forms help with our extensive library of attorney-vetted legal forms. The process is fast and easy. All you have to do is fill out our easy-to-understand questionnaire. Once complete, simply download your form as a PDF or Word document from your secure online account.

What Information Will I Need to Create My License Agreement?

To create your document, please provide:

• Licensor details: Full name and address of the licensor. Choose if the licensor is an individual or business.
• Licensee details: Full name and address of the licensee. Choose if the licensee is an individual or company.
• Licensed materials: Define the licensed subject, the type of license, and if the license is exclusive.
• Compensation: Select royalty payments, a one-time licensing fee, or a combination of the two. Define how royalty payments are calculated if selected.
• Termination: Does the license expire and when? Can it be terminated with a written notice before the expiry date?
• Dispute resolution: Arbitration or court as the default method of solving any dispute that may arise. Select the jurisdiction the licensor has standing in. Most intellectual property laws of concern are US federal laws.

License Agreement Terms

• Licensor: A party giving the limited right to its property in exchange for compensation or consideration.
• The licensee: The party awarded the right to use a property under a set of rules.
• One-time licensing fee: Compensation paid after the License Agreement is executed.
• Royalty payments: Defined as the licensor’s entitlement to a percentage of the licensee’s revenue earned from the licensed property.
• Arbitration: A method of dispute resolution outside of the court system.

License Agreement Signing Requirements

The License Agreement has to be signed by the owner of the property (licensor) and the party authorized to use the license (licensor). Notarization is not typically required, though getting the signatures witnessed and notarized can potentially strengthen the agreement.

What to Do with Your License Agreement

After reviewing the document and signing it, the two parties should keep a copy of the final document. The licensee must pay to the licensor any one-time licensing fee due as defined in the contract. If there is a breach of the agreement, dispute resolution would first proceed as defined in the contract by default.

Frequently Asked Questions

Advantages to the licensee:

• Using an established intellectual property is a proven way to accelerate market penetration.
• Potential savings in research and development.
• Ability to generate revenue through the use of other party’s property.

Advantages to the licensor:

• Generating passive revenues through royalties in addition to the one-time payments.
• Making use of the skills and expertise of the licensee.
• Potentially lower cost and capital requirements as compared to setting up a distribution network.
• The ability to take advantage of the licensee’s distribution network to penetrate new markets.

Disadvantages to the licensee:

• Responsible for marketing, selling, and production.
• The cost of long-term royalties and one-time fee.
• Dependent on the licensor’s intellectual property and its value.

Disadvantages to the licensor:

• Risk of intellectual property theft.
• Partial loss of control over the intellectual property.
• Revenue is dependent on the abilities, skills, and resources of the licensee.

• Trademark Licensing: Trademarks can be brand names, slogans, and logos. A trademark License Agreement allows a licensee to use them.
• Patent Licensing: Patents are used to protect innovations and ideas in science and other fields. A patent License Agreement allows a licensee to make use of things protected in the patent, including the manufacture of products. This comes in handy because not all patent owners are industry giants that have the ability to produce and distribute their own products.
• Trade Secret Licensing: Trade secrets are not protected by federal or state governments but only through secrecy. The best-known trade secrets are formulas for KFC and Coca-Cola products, for example. Trade secret licensing agreements often come with a non-disclosure agreement that passes legal muster.
• Copyright Licensing: Copyright licensing is common in the entertainment industry and includes visual art, songs, and movies. Copyright licensing is mostly non-exclusive. For example, an artist signs a copyright licensing contract to have his or her music featured in a commercial, movie, or TV show.

Exclusive licenses are typically more expensive for the licensee. It is in exchange for the licensor’s guarantee to not license the property to other licensees.
Non-exclusive licenses can potentially generate more revenue for the licensor by casting a wider net. The disadvantage for a licensor in this regard is that with multiple licensing contracts, there is a higher risk of intellectual property theft.
In addition, there is also what is known as a sole license agreement, where the licensor provides an exclusive license but also reserves the right to use the relevant IP.

A perpetual license is a lifetime license to use a specific IP. These licenses are usually expensive as they do not include royalties. The software industry, for instance, uses perpetual licenses.

There are two types of term licenses:

• A one-time fee for a defined term
• Pay per use

Term licenses are more common, and they have the potential to generate continuous revenue for the owner of the IP. If the licensor offers both perpetual and term licenses, you will have to do your analysis and projections and choose the better solution for your business.

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