As a licensor (the person who owns the intellectual property), you are usually required to provide certain warranties to the licensee (the person who is using the intellectual property), including that you own the registered trade marks and patents or are the copyright holder of the intellectual property. To do this you will need an Intellectual Property Licence Agreement.

Originality

You may also need to warrant that the intellectual property you are licensing is your original work and does not infringe the intellectual property rights of any third parties. As a licensee you should review the warranties in an Intellectual Property Licence Agreement to ensure these are in place to protect you if the licensor is dishonest and is not the legal owner of the material to be licensed.

Suitability of purpose

Typically, the licensor gives no warranty to the licensee as to the suitability or fitness of the intellectual property for any particular purpose and will not be liable to the licensee or any third party in relation to losses arising from a failure of the intellectual property to perform in a particular way. The licensor should also exclude all representations, guarantees, warranties or terms (whether express or implied). As a licensor, you should be aware that you cannot exclude Australian Consumer Law if it is applicable and other warranties may apply.

Indemnification, Disclaimers, and limiting liability

Usually the licensee must indemnify the licensor in respect of any claims made against the licensor arising from a breach of this clause by the licensee. As a licensor you should also include a number of disclaimers and limit your liability in relation to the licensee using the intellectual property or in cases where they are not able to use it.

As a licensor you should exclude all liability for any loss, damage, costs or expense (direct or indirect), suffered by the licensee or any third party, or claims made against the licensee or any third party which result from any use of, or any inability to use or access, your intellectual property. As a licensee you should be aware that you may be liable for loss or damage you suffer as a result of using the intellectual property. You should ensure that you are protected in sub-licenses or other agreements and that your own liability is limited in those circumstances. As the licensee, if possible, you should have a clause which states that the licensor will be responsible for losses and damages you suffer where they breach the Intellectual Property Licence Agreement.

Right to take legal action

As the licensor, you should include a clause that states that the licence of the intellectual property under this agreement includes that the licensor has the right to take action and obtain relief in relation to infringements of the intellectual property. This allows you to take action if your intellectual property rights are breached and to seek damages.

Conclusion

Having a well drafted and thorough Intellectual Property Licence Agreement in place reduces the chance of disputes and can help resolve issues between licensees and licensors quickly. If you would like us draft an Intellectual Property Licence Agreement or would like to learn more about Intellectual Property Licence Agreements for your business, contact LegalVision on 1300 544 755 and speak with one of our contract lawyers.

Edith Moss

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