License Agreement in India
Comprehensive guide to creating, negotiating, and managing license agreements for intellectual property.
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Overview of License Agreement
Under Section 52 of the Indian Easement Act, 1882, a license is permission to do something on another’s immovable property that would otherwise be unlawful and does not grant any property interest. In intellectual property, a license agreement is a written contract in which the licensor permits the licensee to use specified IP under agreed terms and conditions for a defined period.
Laws Governing Licensing Agreements
Licensing agreements are governed by multiple statutes including the Indian Contract Act, 1872, Copyright Act, 1957, Trade Marks Act, 1999, Design Act, 2000, Patents Act, 1970, Competition Act, 2002, and applicable state stamp‑duty laws.
Key Elements of a Licensing Agreement
Typical clauses include recitals, party details, tenure, scope of usage, license fee and payment schedule, force majeure, indemnification, accounting and audits, governing laws, and dispute‑resolution mechanism.
Types of Licensing Agreements
• Exclusive licensing – sole rights to the licensee • Non‑exclusive licensing – licensor may license others • Co‑exclusive licensing – limited number of licensees • Sole licensing – licensee has exclusive rights while licensor also retains usage
Issues Covered by Licensing Agreements
Agreements often address copyright, patents, trademarks, service marks, and trade secrets, each with specific usage rights, royalties, and quality‑control provisions.
Major Concerns in Licensing
Key concerns include fair license‑fee calculation, quality control to protect brand reputation, and clearly defined scope of usage aligned with market value.
Risks of Not Having a Written Agreement
Absence of a clear contract may lead to IP misuse, loss of revenue, confusion over rights, and difficulty enforcing legal remedies.
End User Licensing Agreement (EULA)
An EULA is a contract between software developers and users that restricts transfer of rights and protects the licensor’s IP from unauthorized copying or usage.
Key Advantages of Licensing
• Access to new markets and wider customer base • Monetization of unused technological assets • Generation of additional revenue and profit for both parties • Reduced risk and cost compared to full ownership transfer • Protection of intellectual property through contractual safeguards
1. Licensing Agreement Checklist
• Accurate party identification with registration details
• Specific duration and renewal or termination terms
• Proof of licensor’s ownership and right to sublicense
• Comprehensive description of licensed IP
• Clear definitions of technical terms
• Detailed payment schedule and royalty formula
• Indemnification protecting the licensor
• Broad force‑majeure clause
• Compliance with current and future legal requirements
Procedure to Draft a Licensing Agreement
• Consult a legal professional to outline objectives and IP details
• Draft clear, simple language avoiding ambiguous abbreviations
• Incorporate all essential clauses covering scope, fees, confidentiality, dispute resolution, and termination
• Review and negotiate terms to reflect mutual intent
• Execute the agreement with signatures and applicable stamp duty
• Register the agreement with relevant authorities where mandatory
Typical Timeline for Finalizing a License Agreement
Most licensing agreements can be drafted, negotiated, and signed within one to two weeks, depending on complexity and responsiveness of parties.
Why Choose Dostatup?
Dostatup offers expert assistance in drafting customized licensing agreements that protect IP and align with business goals.
Specialized IP legal team
Tailored clauses covering all risks
Guidance on registration and compliance
Transparent, fixed‑fee packages