A licence grants a party the legal right to use a
product owned by someone else. As a licensor or a licensee, here
are some tips you should consider when negotiating your next
Exclusivity. Will the licence be exclusive or
non-exclusive? As a licensor, don't limit yourself to granting
an exclusive licence unless you are being properly
Term. Will the term be perpetual or limited?
Consider limiting an exclusive licence to a specific period so you
have the flexibility to re-negotiate its conditions.
Limitations. What limitations (if any) will
the licence impose on the licensee? These may include geographical
boundaries or usage limits. As a licensee who is also a service
provider, ensure you are granted the right to sub-license to your
customers where necessary.
Intellectual property. The intellectual
property in a licensed product is usually retained by the licensor.
If the licensee has the right to enhance or modify the product,
consider which party owns the intellectual property in the
enhancements or modifications.
Fee. Will a licence fee apply, or will the
licence be royalty-free? Perpetual licence fees should ideally be
paid upfront. Consider any termination fees if the licence is
terminated prior to the expiry date.
Termination. Clearly draft the circumstances
under which a licence may be terminated. Even an
'irrevocable' licence may be terminated for breach.
Escrow. For software licences, it's a good
idea for a licensee to require the source code of any business
critical software to be held in escrow in case the licensor goes
out of business.
Spelling. Americans call it a
"license"; here it's a "licence". Except
when you're using it as a verb...
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The Court confirmed it was not trade mark infringement to use words of a composite trademark in the title of a web page.
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