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Licensing IP: Types, Agreement Terms, Drafting Tips

This page explains licensing IP, what's included in an IP licensing agreement, and how a lawyer from ContractsCounsel can draft a solid IP licensing agreement for you.

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Quick Facts — Intellectual Property License Agreement Lawyers

What is Licensing IP?

Licensing IP (Intellectual Property) is the process of giving other people permission to use your IP for payment.

It’s essential for an agreement to be drafted between the licensor and licensee, and it should feature key terms such as regarding ownership, rights, and duties. This ensures the licensor can protect their IP and both parties can avoid disagreements or disputes.

Read the rest of this article to learn more about licensing IP, common IP license types, how licensing your content works, what licensing IP agreements should include, and when to seek guidance from a qualified lawyer.

What are Common IP Licenses?

There are various types of IP licenses, with some of the most common including the following:

  • Patent license. This protects innovations and is commonly used in engineering, health, and hardware industries. Patent licensing gives permission to others to make or sell their inventions.
  • Copyright license. This protects the licensor’s creative output, such as books, music, software, and visual art. A license controls the copying and distribution of the material.
  • Trademark license. IP such as brand names, taglines, and logos can be used by licensees in various ways, such as merchandising and co-branding.
  • Trade secret license. Under this license, the licensee will be allowed to use confidential information, but confidentiality clauses must be included in the agreement so that the licensor’s sensitive information remains protected.

How Does Licensing IP Work?

Licensing your IP usually involves the following guidelines.

  • Identifying the IP content. These need to be protected, such as with trademarks or patents. By officially registering your IP, you’ll be able to easily prove that you own the content. This also makes it easier for you to enforce your rights.
  • Valuation. Before you can grant permission to others to use your IP, you need to consider its financial value. Check what similar IP types on the market are being licensed for, to help you calculate your IP’s worth.
  • Negotiation. You and the other party will come to an agreement over the type of license you wish to grant them, payment for it, and other key terms.
  • Agreement drafting. Once you’ve reached an agreement, you and the other party will get it in writing and sign the agreement.
  • Monitoring. Once the person starts using the IP, they will have to remain legally compliant and avoid violations. Monitoring for compliance is recommended.

What’s Included in an IP License Agreement?

An IP license agreement contains key terms and information, such as the following:

  • License grant. This outlines the conditions in which the IP can be used with permission. The scope and rights granted need to be included.
  • Type of license. Is the IP license exclusive or non-exclusive? If it’s exclusive, the licensee gains exclusive rights to use the IP. If it’s non-exclusive, multiple parties can be granted the license.
  • Duration. How long the license will last can be a few months or even a few years, so the parties’ needs should be considered.
  • Territory. Where the license is allowed to be used needs to be specified.
  • Payment terms. Both parties will agree to a fair and clear payment term for the IP usage.
  • Royalties. The agreement can include royalty structures such as a sales percentage being awarded to the licensor, based on the licensee’s generated profits from using the content.
  • Sublicensing. To ensure clarity with the license terms, this section will specify if the licensee can grant licenses to third parties.
  • Infringement. If the IP is used incorrectly, the contract should outline who is responsible and the consequences of infringement.
  • Termination. If either party wants to end the contract, a termination clause will specify how this can be completed fairly.

What are Tips for Drafting a Solid IP Licensing Agreement?

To ensure that your IP licensing agreement is clear and fair to both parties, there are some tips to consider.

  • Specify all rights. The contract has to clearly define what rights will be granted and in what context so that there’s no confusion that can result in disputes.
  • Protect yourself. There should be clauses included that protect you against any risks, such as liability or infringement.
  • Include dispute-resolution methods. Should a dispute arise between you and the other party, the contract should provide methods for resolution, such as mediation or arbitration to keep the dispute out of court.

Do You Need a Lawyer for IP Licensing?

Since an IP licensing agreement is required to ensure both parties agree to important terms of the license, you should ask a lawyer to draft a clear, fair, and legally enforceable contract.

You can hire a lawyer from ContractsCounsel, an online legal marketplace that connects clients with vetted IP lawyers, for assistance with drafting a legally solid and clear licensing agreement to protect both parties.

A lawyer can also help you in other ways, such as by:

  • Defining your ownership and rights. This prevents other parties from being able to claim rights at a later stage for IP that you own.
  • Defining the license scope. A lawyer will check the territory and duration of the license so that they’re reasonable and meet your requirements.
  • Helping you choose the best license structure. They’ll help you figure out if your license should be exclusive or non-exclusive, taking your goals into account.
  • Clearing up any vague language in the contract. This will prevent any red flags or loopholes that could cause you issues.
  • Minimizing your risks. A lawyer will help you avoid any misuse or infringement, as well as sublicensing problems. They’ll ensure limitations of liability are in place so that you don’t put yourself at unnecessary risk.
  • Keeping you legally compliant. Lawyers have strong legal knowledge to ensure you remain compliant with all applicable laws and regulations, including those that apply to international licenses.

Do you need to hire a lawyer for IP licensing?

You should contact a lawyer on ContractsCounsel. They’ll draft a well-written, professional, and legally-sound IP licensing agreement. They can also advise you on all aspects of licensing your IP so that you remember your rights, avoid costly mistakes, and remain legally compliant.


ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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