What is Master License Agreement Drafting?
A master license agreement is a contract between a licensor and licensee so that they can define essential terms for the licensing of intellectual property (IP) or software.
Since it’s a foundational contract, it creates guidelines for future licensing, preventing parties from having to renegotiate terms for other transactions.
Read the rest of this article to explore what’s included in a master license agreement, how to draft it, and how a lawyer can help you with the contract-drafting process to protect your business relationship and interests.
What Key Terms are in a Master License Agreement?
A master license agreement needs to tackle core essentials, such as the following:
- License grant. The agreement must specify what rights are granted to the licensee or user. For example, they might be given the right to use or distribute the IP.
- Payments. The payment and fee structures should be defined.
- IP ownership. It’s important for the agreement to specify that the licensor owns the IP to prevent disputes.
- Liability and indemnification. Both parties will be protected against claims by these clauses in the agreement.
- Order forms. These shorter documents can be created to detail certain transactions for clarity. They’re bound by the master license agreement.
- Term. How long the contract is meant to last must be indicated, and if it will auto-renew at the end of the term.
- Termination. This specifies how the agreement can end and what’s required, such as certain notice periods.
- Territory. The location in which the license can be used must be included.
- Governing law. Explain the governing law and jurisdiction so that there’s a suitable method for dispute resolution should conflict arise between parties.
How Should You Draft a Master License Agreement?
Besides including key terms in the contract, you should also mention additional information.
Explain Parties’ Responsibilities
Both parties’ duties should be included for clarity. This should include work scope details, what services are going to be provided, and what quality standards must be met. This prevents misunderstandings and establishes mutual expectations for a solid working relationship.
Consider Acceptance Testing
It’s important to clarify how acceptance testing for deliverables will be conducted, with contract provisions to assist parties through the process. Explore what acceptance criteria is established, how deliverables can be rejected, and how rejections can be resolved.
Enable Order Changes
The change order process must provide information for how modifications to the agreement can be made, such as how a party can ask for a change and how it will be approved.
Include Warranties
To prevent risks associated with the provided services, the agreement should contain a clear warranties section. This basically provides assurance from the provider to the user about the quality and performance of the products.
Consider a Non-Solicitation Clause
To protect a company’s reputation and operations, there should be a non-solicitation clause included in the master license agreement. This will serve to prevent the customer from recruiting company employees or vendors.
Make it Compliant
There are various compliance obligations to consider when drafting a master license agreement. Consider the applicable laws, such as employment and consumer protection laws. Include a clause that states both parties will comply with all relevant local, national, and international laws.
Specify Post-Termination Obligations
After the contract ends, there should be clarity about what parties still need to do. The agreement should state post-termination duties, such as by considering what will happen to any existing licenses and if confidential information must be destroyed or returned.
How Does a Lawyer Help You with Master License Agreement Drafting?
Enlisting a lawyer for help with drafting a master license agreement is beneficial, especially if you’re worried about facing business or legal risks.
A lawyer will conduct the following activities during the drafting process:
- Clarifying what IP is licensed, such as patents or copyrights; which party owns it, and how it can be used by the licensee.
- Explaining the license scope for clarity, such as where it can be used and if it’s exclusive.
- Drafting clear payment terms to prevent disputes, such as what royalty structure, license fees, and payment schedules apply to the agreement.
- Allocating risks fairly by negotiating warranties, liabilities, and other clauses with the other party.
- Complying with all industry regulations and relevant laws.
- Planning for future transactions. A lawyer will ensure that they can add other information to the agreement without having to renegotiate all its terms.
Where to Find a Lawyer for Master License Agreement Drafting
If you need to hire a lawyer to help you draft a master license agreement, an online legal marketplace makes the process easier than if you have to cold-call traditional law firms in your area.
An example of an online legal platform is ContractsCounsel, one of the largest online legal marketplaces that gives you access to a network of vetted lawyers. Instead of searching for and hiring a lawyer, you’ll post a request for a contract drafting and receive bids from lawyers.
If you want to ask that a vetted lawyer on the platform drafts your master license agreement, here are the easy steps to follow:
- Go to the ContractsCounsel marketplace.
- Post your project for free. Include a few details to help you find the most suitable lawyer, such as the type of IP you’re interested in licensing.
- Receive multiple bids from lawyers directly on the platform who have the experience and contract-drafting skills to help you.
- Review the lawyers’ profiles. Take some time to go through the platform’s lawyer data. There’s a wealth of information provided on the platform, such as the lawyers’ location, client ratings for previous projects, expertise, and credentials.
- Connect with a lawyer you think is best suited to your requirements and hire them.
