A license agreement is a legal contract that gives permission from a property owner to another party to use their trademark, product, or intellectual property in exchange for financial compensation.
Sometimes, a license agreement permits users to use a service or property without payment.
The person who issues a licensing agreement is known as the licensor, and the person who agrees to the terms of usage is known as the licensee.
A licensing agreement lawyer is an attorney with a business and contract law background. Some may also be tech lawyers who work exclusively with technology companies that need a user license agreement, technology license agreement, or software license agreement for their products and services.
What Does a Lawyer for a Licensing Agreement Do?
Lawyers who write licensing agreements to review their clients’ products and services and craft personalized legal documents for their brand.
When writing a licensing agreement, the lawyer will incorporate all the essential parts of a licensing agreement, along with specific terms of usage related to their clients’ goods or services.
Well-drafted licensing agreements protect both the licensors and licensees. Therefore, the document should cover the two parties’ best interests and legal rights.
When writing a technology licensing agreement, there are extra provisions that a lawyer must take. In many cases, software licensing agreements run on a subscription-based service. Software-as-a-Service ( SaaS agreement ) licensing agreements help businesses protect their bottom lines while ensuring their customers get the best possible service during their contracts.
Here is an article with more information about how SaaS licenses work.
Key Terms in a Licensing Agreement
Every licensing agreement is unique, but there are some key elements to include in every solid licensing agreement contract.
It would be best to look for the most essential parts of a licensing agreement in your document.
- Exclusivity. State the restrictions that users have regarding what they cannot do with their license. For example, having the ability to use original products created through a licensed service does not mean the user may have the right to sell products created through that platform without express permission from the developer.
- Payment terms. Detail what type of compensation is required for someone to access their license. This agreement portion can also include royalties that a licensor receives whenever a licensee publishes their property for commercial use.
- Territory. You should clarify exactly where a person can freely use their rights granted within their license and restrict any territories from the agreement. For example, you may allow someone to use your property in the United States only but prohibit them from using their license abroad.
- Quality assurance and protection provisions. It outlines the process for ensuring the license's property's publication, marketing, and distribution meet their standards. It can also outline financial consequences for failure to adhere to quality assurance protocol.
- Term. The duration of any licensing agreement is known as its term. Some terms are per-use, while others are per subscription. For example, you may pay for a one-time licensing agreement or have an ongoing agreement with a licensor that grants you access to use their property continuously.
These are several of what can be many terms outlined in a licensing agreement. The scope of your document will vary based on what you are licensing and the level of protection you want to incorporate into your agreement.
Here is an article with ContractsCounsel’s guide to licensing agreements, what they are, and how they work.
Types of Licensing Agreements
There are three primary types of licensing agreements that you may use in your business.
An exclusive licensing agreement grants the licensee permission to exclusively use the licensor’s property for a period of time. However, not even the property owner is permitted to publish, market, or distribute the material until the agreement is over.
Receiving the exclusive right to a person or company’s property allows you to leverage it to your greatest advantage; it eliminates the risk of competition and ensures that the property is only used for a specified purpose.
Sole licensing agreements function exactly like exclusive licensing agreements. Only they also allow the licensor to perform the same rights as the licensee during the length of the contract.
Sole licenses offer greater flexibility for both parties. Exclusive license agreements subsequently cause the owner to relinquish their rights for a given period of time. Sole rights allow them to maintain greater control over their property while still granting permission of use to another party.
A nonexclusive license agreement allows the licensor to grant rights for their property to multiple licensees. No individual licensee has greater rights than another, and the owner also maintains their rights throughout the length of the contracts.
Here is an article with in-depth information about types of licensing.
How Much Does a Lawyer for a Licensing Agreement Cost?
According to ContractsCounsel’s marketplace, the typical licensing agreement cost is $711.90. Lawyers can charge a flat fee per hour for their licensing agreement services. Depending on the complexity of your document, it can cost more to ensure your agreement comprehensively covers all of your best interests.
Experienced lawyers can estimate how long it will take them to draft a licensing agreement.
To save money, you might consider exploring licensing agreement templates online for free, then submitting your edited draft to a lawyer for review.
Reviewing contracts can be less expensive than drafting them because the client has already done much work on their behalf. However, one thing to know is that licensing agreements vary drastically, so you may not be able to find a template that fully covers every detail you need for your situation.
If you decide to use an online template, ensure you include as much relevant detail as possible. Consider what limitations you want to enforce and the appropriate compensation for your license. Remember, people are paying to use your property, so you are legally entitled to payment for a license.
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