INTELLECTUAL PROPERTY LICENSE AGREEMENT
[// GUIDANCE: Replace bracketed placeholders with party-specific information before execution.]
TABLE OF CONTENTS
- Definitions
- License Grant and Scope
- Consideration; Payment Terms
- Performance Standards; Records & Audit Rights
- Confidentiality
- Representations and Warranties
- Covenants and Restrictions
- Indemnification
- Limitation of Liability
- Term and Termination
- Default and Remedies
- Dispute Resolution
- General Provisions
- Execution
1. DEFINITIONS
[// GUIDANCE: Maintain alphabetical order and cross-reference each term consistently.]
“Affiliate” – Any entity that directly or indirectly controls, is controlled by, or is under common control with a Party.
“Arbitration Rules” – The Commercial Arbitration Rules of the American Arbitration Association (“AAA”) in effect on the Effective Date.
“Authorized Sublicensee” – A third party to whom Licensee is permitted to grant a sublicense pursuant to Section 2.3.
“Confidential Information” – All non-public information disclosed by a Party in connection with this Agreement that is designated as confidential or that reasonably should be understood to be confidential.
“Effective Date” – [EFFECTIVE DATE].
“Field of Use” – [DESCRIBE PERMITTED FIELD].
“License” – The rights granted in Section 2.1.
“Licensed IP” – (a) the patents, copyrights, trademarks, trade secrets, and other intellectual property described in Exhibit A and (b) all modifications, enhancements, and derivatives thereof provided by Licensor during the Term.
“Net Sales” – Gross amounts actually received by Licensee from exploitation of the Licensed IP, less [AGREED DEDUCTIONS].
“Party” – Licensor or Licensee, and “Parties” means both.
“Territory” – [GEOGRAPHIC SCOPE].
“Term” – The period described in Section 10.1.
2. LICENSE GRANT AND SCOPE
2.1 Grant. Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee a non-transferable, [exclusive/non-exclusive], royalty-bearing right and license to use, reproduce, display, perform, distribute, and otherwise exploit the Licensed IP within the Field of Use and Territory during the Term.
2.2 Reservation of Rights. All rights not expressly granted to Licensee are reserved by Licensor.
2.3 Sublicensing. Licensee may grant sublicenses only to Authorized Sublicensees and only pursuant to written agreements no less protective of Licensor’s interests than this Agreement. Licensee shall remain liable for all acts and omissions of its Authorized Sublicensees.
2.4 Trademark Usage. Any use of Licensor’s trademarks shall comply with Licensor’s then-current trademark guidelines supplied to Licensee.
2.5 Compliance with Laws. Licensee shall comply with all applicable laws, rules, and regulations in its exercise of the License, including export control and privacy laws.
3. CONSIDERATION; PAYMENT TERMS
3.1 Up-Front Fee. Licensee shall pay Licensor a non-refundable up-front license fee of [AMOUNT] within [NUMBER] days after the Effective Date.
3.2 Royalties. Licensee shall pay Licensor a running royalty equal to [PERCENTAGE]% of Net Sales, due quarterly within thirty (30) days after the end of each calendar quarter, accompanied by a written statement certified by an authorized officer of Licensee.
3.3 Late Payments. Any undisputed amount not paid when due shall accrue interest at the lesser of (a) one percent (1%) per month or (b) the maximum rate permitted by law.
3.4 Taxes. Licensee is responsible for all taxes, duties, and charges imposed on amounts payable under this Agreement, except taxes based on Licensor’s net income.
[// GUIDANCE: Insert milestone payments or minimum royalties if commercially appropriate.]
4. PERFORMANCE STANDARDS; RECORDS & AUDIT RIGHTS
4.1 Diligence. Licensee shall use commercially reasonable efforts to develop, market, and sell products or services incorporating the Licensed IP.
4.2 Records. Licensee shall maintain complete and accurate books and records sufficient to verify all amounts payable to Licensor for at least three (3) years after the period to which such records relate.
4.3 Audit. Licensor may, upon at least ten (10) business days’ prior written notice, engage an independent certified public accountant to audit Licensee’s relevant records no more than twice per calendar year. If an audit reveals an underpayment of greater than five percent (5%) for any period, Licensee shall bear the cost of the audit and remit all underpaid amounts within ten (10) days.
5. CONFIDENTIALITY
5.1 Obligation. Each Party shall (a) keep Confidential Information in strict confidence, (b) use it solely to perform under this Agreement, and (c) disclose it only to its employees, agents, and advisors who have a need to know and are bound by confidentiality obligations no less protective than this Section 5.
5.2 Exceptions. Confidential Information does not include information that: (a) is or becomes public without breach; (b) was lawfully known to the receiving Party before disclosure; (c) is independently developed without use of Confidential Information; or (d) is rightfully received from a third party without restriction.
5.3 Compelled Disclosure. A Party may disclose Confidential Information pursuant to a valid court or governmental order, provided it gives prompt notice to the disclosing Party and reasonably cooperates to limit disclosure.
6. REPRESENTATIONS AND WARRANTIES
6.1 Mutual. Each Party represents and warrants that:
(a) it is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation;
(b) it has full power and authority to enter into and perform this Agreement; and
(c) this Agreement constitutes a legal, valid, and binding obligation enforceable against it in accordance with its terms.
6.2 Licensor. Licensor further represents and warrants that:
(a) it is the sole and exclusive owner of the Licensed IP or otherwise has the right to grant the License;
(b) to Licensor’s knowledge, the Licensed IP does not infringe any third-party intellectual property rights within the Territory; and
(c) it has not granted any conflicting rights in the Licensed IP within the Field of Use and Territory.
6.3 Disclaimer. EXCEPT AS EXPRESSLY STATED IN THIS SECTION 6, LICENSOR MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.
6.4 Survival. All representations and warranties survive the expiration or termination of this Agreement for the applicable statute of limitations period.
7. COVENANTS AND RESTRICTIONS
7.1 Quality Standards. Licensee shall ensure that all products and services incorporating the Licensed IP meet or exceed the quality standards mutually agreed by the Parties in Exhibit B.
7.2 Non-Contest. Licensee shall not challenge, nor assist any third party in challenging, the validity, enforceability, or Licensor’s ownership of the Licensed IP.
7.3 Use Restrictions. Licensee shall not: (a) reverse-engineer, decompile, or disassemble any Confidential Information except to the extent expressly permitted by law; (b) use the Licensed IP outside the Field of Use or Territory; or (c) remove proprietary notices from any materials provided by Licensor.
7.4 Notice of Infringement. Each Party shall promptly notify the other of any known or suspected infringement of the Licensed IP. Licensor shall have the first right, but not the obligation, to enforce the Licensed IP at its own cost and expense. Licensee shall reasonably cooperate in any such enforcement.
8. INDEMNIFICATION
8.1 Licensor Indemnity. Licensor shall defend, indemnify, and hold harmless Licensee, its Affiliates, and their respective officers, directors, employees, and agents (“Licensee Indemnitees”) from and against any and all third-party claims, actions, or proceedings (“Claims”) arising out of or alleging that the Licensed IP, or Licensee’s use thereof in accordance with this Agreement, infringes or misappropriates any intellectual property right.
8.2 Conditions. Licensee Indemnitees must (a) promptly notify Licensor in writing of any Claim, (b) permit Licensor to control the defense and settlement of the Claim, and (c) reasonably cooperate (at Licensor’s expense) in the defense. Licensor shall not settle any Claim without Licensee’s prior written consent unless it unconditionally releases all Licensee Indemnitees from all liability.
8.3 Exclusions. Licensor shall have no indemnity obligation to the extent a Claim is based on: (a) use of the Licensed IP in combination with products or services not supplied by Licensor, if the Claim would not have arisen but for such combination; (b) modifications made by Licensee not authorized by Licensor; or (c) Licensee’s breach of this Agreement.
8.4 Infringement Remedies. If a Claim is or is likely to be sustained, Licensor may, at its option and expense: (a) procure for Licensee the right to continue using the Licensed IP; (b) replace or modify the Licensed IP so that it is non-infringing; or (c) terminate the affected License and refund any prepaid, unearned fees.
[// GUIDANCE: The indemnity above is consistent with the “licensor_ip_indemnity” requirement.]
9. LIMITATION OF LIABILITY
9.1 Exclusion of Consequential Damages. EXCEPT FOR (a) BREACHES OF CONFIDENTIALITY, (b) INDEMNIFICATION OBLIGATIONS, AND (c) LICENSEE’S UNAUTHORIZED USE OR DISCLOSURE OF THE LICENSED IP, NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES, INCLUDING LOST PROFITS OR REVENUES, EVEN IF ADVISED OF THE POSSIBILITY.
9.2 Liability Cap. EXCEPT FOR (i) EITHER PARTY’S LIABILITY FOR BREACH OF SECTION 5 (CONFIDENTIALITY) OR SECTION 2 (LICENSE GRANT AND SCOPE), (ii) LICENSEE’S PAYMENT OBLIGATIONS, AND (iii) LICENSOR’S LIABILITY FOR BREACH OF THE LICENSE OR ITS IP INDEMNITY UNDER SECTION 8, EACH PARTY’S AGGREGATE LIABILITY ARISING OUT OF THIS AGREEMENT SHALL NOT EXCEED THE TOTAL AMOUNTS PAID AND PAYABLE BY LICENSEE TO LICENSOR DURING THE TWELVE (12) MONTHS PRECEDING THE EVENT GIVING RISE TO LIABILITY.
9.3 No Cap for IP Breach. NOTWITHSTANDING SECTION 9.2, THERE SHALL BE NO MONETARY CAP ON LICENSOR’S LIABILITY FOR BREACH OF ITS IP INDEMNITY OR LICENSE GRANT OBLIGATIONS.
[// GUIDANCE: Section 9 reflects “no_cap_for_ip_breach” and preserves standard caps for other claims.]
10. TERM AND TERMINATION
10.1 Term. This Agreement commences on the Effective Date and continues for [INITIAL TERM] years, automatically renewing for successive one-year periods unless either Party provides at least ninety (90) days’ prior written notice of non-renewal.
10.2 Termination for Cause. Either Party may terminate this Agreement upon written notice if the other Party materially breaches this Agreement and fails to cure within thirty (30) days after receipt of notice.
10.3 Insolvency. Either Party may terminate upon written notice if the other Party: (a) becomes insolvent; (b) files or has filed against it a petition in bankruptcy that is not dismissed within sixty (60) days; or (c) makes an assignment for the benefit of creditors.
10.4 Effect of Termination. Upon termination or expiration:
(a) all rights granted to Licensee cease immediately;
(b) Licensee shall return or destroy all Confidential Information and Licensed IP in its possession;
(c) Licensee shall provide a final royalty report and pay all amounts due within thirty (30) days; and
(d) Sections 1, 3.2–3.4, 4.2–4.3, 5, 6.3–6.4, 8–13 shall survive.
11. DEFAULT AND REMEDIES
11.1 Events of Default. The following constitute Events of Default:
(a) Non-payment of any undisputed amount within ten (10) days after written notice of delinquency;
(b) Material breach of Section 2 (License Grant), 5 (Confidentiality), or 7 (Covenants);
(c) False or misleading reports under Section 3.2.
11.2 Notice and Cure. Except for payment defaults, the non-defaulting Party shall provide written notice specifying the default, after which the defaulting Party has thirty (30) days to cure.
11.3 Remedies. Upon an Event of Default:
(a) The non-defaulting Party may terminate this Agreement under Section 10.2;
(b) Licensor may seek injunctive relief without posting bond to prevent unauthorized use or disclosure of the Licensed IP;
(c) The non-defaulting Party may exercise any other rights or remedies available at law or equity.
11.4 Attorneys’ Fees. The prevailing Party in any action or proceeding to enforce this Agreement is entitled to recover its reasonable attorneys’ fees and costs.
12. DISPUTE RESOLUTION
12.1 Governing Law. This Agreement is governed by and construed in accordance with the laws of [GOVERNING LAW STATE/COUNTRY], without regard to its conflict-of-laws principles.
12.2 Exclusive Jurisdiction for Injunctive Relief. Each Party irrevocably submits to the exclusive jurisdiction of the state and federal courts located in [JURISDICTION] for the limited purpose of seeking injunctive relief under Sections 11.3(b) and 12.4, and waives any objection to venue or forum non conveniens.
12.3 Arbitration. Except for actions seeking injunctive relief as provided above, any dispute, controversy, or claim arising out of or relating to this Agreement shall be finally resolved by binding arbitration administered by the AAA under the Arbitration Rules.
(a) The arbitration shall be conducted by a panel of [ONE/THREE] arbitrator(s) fluent in English.
(b) The seat of arbitration shall be [CITY, STATE].
(c) Judgment on the award may be entered in any court of competent jurisdiction.
12.4 Injunctive Relief Preservation. Each Party acknowledges that breach of Sections 2, 5, or 7 may cause irreparable harm for which monetary damages are inadequate, and agrees that the non-breaching Party may seek immediate injunctive relief in a court of competent jurisdiction in accordance with Section 12.2.
12.5 Jury Trial Waiver. EACH PARTY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY JUDICIAL PROCEEDING PERMITTED UNDER THIS AGREEMENT.
13. GENERAL PROVISIONS
13.1 Amendments and Waivers. No amendment or waiver of any provision of this Agreement is effective unless in writing and signed by both Parties. A waiver is effective only for the specific instance and purpose given.
13.2 Assignment. Neither Party may assign or transfer this Agreement, by operation of law or otherwise, without the prior written consent of the other Party, except to an Affiliate or in connection with a merger, acquisition, or sale of substantially all assets, provided the assignee assumes all obligations herein in writing. Any attempted assignment in violation of this Section 13.2 is void.
13.3 Successors and Assigns. This Agreement binds and benefits the Parties and their respective permitted successors and assigns.
13.4 Severability. If any provision of this Agreement is held unenforceable, the remaining provisions will remain in full force, and the unenforceable provision will be reformed to the minimum extent necessary to render it enforceable.
13.5 Force Majeure. Neither Party is liable for delay or failure to perform due to causes beyond its reasonable control, including acts of God, war, terrorism, labor disputes, governmental actions, or failures of suppliers or utilities, provided it promptly notifies the other Party and uses reasonable efforts to mitigate the impact.
13.6 Integration. This Agreement, including all Exhibits, constitutes the entire understanding between the Parties regarding its subject matter and supersedes all prior or contemporaneous agreements, proposals, or communications, written or oral.
13.7 Counterparts and Electronic Signatures. This Agreement may be executed in counterparts (including by electronic signature or PDF), each of which is deemed an original and all of which together constitute one instrument.
13.8 Notices. All notices under this Agreement must be in writing and delivered by personal delivery, recognized courier, or certified mail (return receipt requested) to the addresses set forth below (or as later designated), and are deemed given upon receipt.
14. EXECUTION
IN WITNESS WHEREOF, the Parties have caused this Intellectual Property License Agreement to be executed by their duly authorized representatives as of the Effective Date.
| LICENSOR | LICENSEE |
|---|---|
| [LEGAL NAME] | [LEGAL NAME] |
| By: ________ | By: ________ |
| Name: ______ | Name: ______ |
| Title: _____ | Title: _____ |
| Date: ______ | Date: ______ |
EXHIBIT A
Description of Licensed IP
[Insert detailed list, including patent numbers, copyright registrations, trademarks, trade secrets, software modules, documentation, etc.]
EXHIBIT B
Quality Standards
[Specify objective quality metrics, inspection rights, and approval procedures.]
[// GUIDANCE: Conduct a jurisdiction-specific review (e.g., UCC § 2-312 for infringement warranty; U.S. Copyright Act, 17 U.S.C. § 101 et seq.) to ensure compliance with local statutory requirements before finalizing.]