As a licensor (the party who owns the intellectual property), when drafting your Intellectual Property Licence Agreement you should consider whether you would like to sub-licence the licence and in what circumstances. You may like to have the opportunity to approve the sub-licensee, or may allow the licensee to sub-license as long as they incorporate the terms and conditions of the licence you have with the licensee (the party using the intellectual property).

Sub-licence clause

If the licensee engages a sub-licensee, they should agree to remain primarily liable to fulfil their obligations under the agreement. You may like to consider including a sub-licencing clause in your Intellectual Property Licence Agreement where you require the sub-licensee to enter into a written agreement with the sub-licensee incorporating the material terms of the Intellectual Property Licence Agreement. As a licensee, you should review the Intellectual Property Licence Agreement to see whether you can sublicense, whether you are required to get the permission of the licensor, and whether consent may not be unreasonably withheld. This may make it easier for you seek approval, as they cannot withhold consent unless there is a reasonable reason to not give approval. You should consider whether you are planning on selling your business in the future and whether you would like to transfer the licence at some point in time when looking at this clause.

Who owns the Intellectual Property?

As a licensor it is important to understand who is actually licensing the material in the first place. For example, is it you as an individual or your company? You should also make sure that the correct party is licensing the material and should check whether your company or you personally owns the intellectual property. If this is not how you would like the intellectual property to be licensed, you may need to assign the intellectual property to yourself or your company to then sub-license it to a third party. We can assist by drafting a short intellectual property assignment for this purpose. This is a simpler version, as you do not require lengthy terms and conditions when you are essentially assigning the property to yourself. You also need to establish who owns the registered trademarks or patents to ensure the correct owner is licensing the intellectual property. You may in some circumstances need to sub-license intellectual property rather than assign the property to then sub-licence it to a third party. We can also draft a simple sub-licence from your company to you if required.

What is best for your business?

As a licensor, it is important to understand your relationship with sub-licensees and the options you have in approving or not approving sub-licences. As a small business, it is important that you protect your intellectual property. Allowing sub-licensing may make it more attractive to licensees but you should consider what is best for your business. As a licensee, if you are planning on sub-licencing, we can assist you in drafting a licence that incorporates the terms and conditions of your existing Intellectual Property Licence Agreement and provide you with additional terms and conditions.

Conclusion

The lawyers at LegalVision have extensive experience drafting Intellectual Property Licence Agreements and Sub-licence Agreements for businesses across Australia. We have assisted many different people who work in a variety of industries to expand and grow their business and exploit their intellectual property, so if you’re in need of legal advice, contact us on 1300 544 755 and speak with one of our experienced online business lawyers.

Edith Moss

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