What is a licence agreement?

Intellectual property rights give the owner of these rights the right to exclude third parties from using these rights. The owner of a patent, a trademark or a copyright may decide to give third parties permission to use his rights. This permission is called a licence (or in American English "license").

Although a  license may be given unilateral due to the complicated nature of intellectual property rights it is strictly recommended to fix the terms of the licence in a licence agreement, which is also called a licence contract. The party granting the licence is called licensor and the party taking the licence is called licensee.

What is the object of a licence agreement ?

Although licences may be granted without charges the main goal of a licensor most of the time is to earn money by licensing a patent, a trade mark or copy rights. The money to be paid is called a licence fee or also a royalty. As long as the licensee is fulfilling his obligations from the licence agreement his actions are not considered to be infringing the intellectual property rights of the owner of the intellectual property rights.

There are many variations of a licence agreement so that a licensor should seek legal advice to fit the licence agreements to his special needs, like the nature of the licence (exclusive or non-exclusive), term and territory provisions of the license contract. But also a licence agreement may impose obligations to a licensor like defending his IPR against infringements of non-licensed parties or the obligating to uphold his IPR (e.g. paying the annuities for patents, or renewing trade marks).