Non-Exclusive Intellectual Property License Agreement - California

NON-EXCLUSIVE INTELLECTUAL PROPERTY LICENSE AGREEMENT

STATE OF CALIFORNIA

This Non-Exclusive Intellectual Property License Agreement ("Agreement") is entered into as of [__/__/____] ("Effective Date") by and between:

LICENSOR:
Name: [________________________________]
Address: [________________________________]
City: [________________________________], California [____]
Entity Type: ☐ Corporation ☐ LLC ☐ Partnership ☐ Sole Proprietor ☐ Other: [____]
California SOS Entity No.: [________________________________]

LICENSEE:
Name: [________________________________]
Address: [________________________________]
City: [________________________________], State: [____] ZIP: [____]
Entity Type: ☐ Corporation ☐ LLC ☐ Partnership ☐ Sole Proprietor ☐ Other: [____]

Licensor and Licensee are each a "Party" and collectively the "Parties."

TABLE OF CONTENTS

1. Definitions
2. Grant of Non-Exclusive License
3. Field of Use and Territory
4. Restrictions on Use
5. Compensation and Royalties
6. Accounting, Reports, and Audit Rights
7. Intellectual Property Ownership
8. Improvements, Derivative Works, and Employee Inventions
9. Quality Control
10. Representations and Warranties
11. Indemnification
12. Limitation of Liability
13. Confidentiality and Trade Secret Protection
14. Term and Renewal
15. Termination
16. Effects of Termination
17. Infringement by Third Parties
18. Insurance
19. Dispute Resolution and Governing Law
20. California-Specific Provisions
21. Miscellaneous Provisions
22. Schedules

ARTICLE 1: DEFINITIONS

1.1 "Confidential Information" means non-public information disclosed by either Party, including trade secrets as defined under the California Uniform Trade Secrets Act (Cal. Civ. Code § 3426.1) and federal law (18 U.S.C. § 1839(3)).

1.2 "Derivative Works" means any work based upon the Licensed IP, as defined under 17 U.S.C. § 101.

1.3 "Field of Use" means the application, industry, or market segment described in Schedule A, Section 2.

1.4 "Licensed Copyrights" means copyrighted works in Schedule A, Section 1(b), under Title 17 of the United States Code.

1.5 "Licensed IP" means, collectively, Licensed Patents, Licensed Copyrights, Licensed Marks, and Licensed Trade Secrets in Schedule A.

1.6 "Licensed Marks" means trademarks and service marks in Schedule A, Section 1(c), under 15 U.S.C. §§ 1051-1141 and California common law and statutory trademark protections.

1.7 "Licensed Patents" means patents and applications in Schedule A, Section 1(a), under 35 U.S.C. §§ 1-390.

1.8 "Licensed Trade Secrets" means trade secrets in Schedule A, Section 1(d), protected under Cal. Civ. Code §§ 3426-3426.11 and 18 U.S.C. § 1836.

1.9 "Net Revenue" means gross revenue from Licensee's exploitation of Licensed IP, less: (a) actual returns; (b) trade and quantity discounts granted; (c) applicable taxes paid (including California sales tax); and (d) outbound transportation charges separately billed.

1.10 "Territory" means the geographic area in Schedule A, Section 3.

ARTICLE 2: GRANT OF NON-EXCLUSIVE LICENSE

2.1 License Grant. Subject to this Agreement, Licensor grants Licensee a non-exclusive, non-transferable license to use, reproduce, display, perform, make, have made, sell, offer to sell, and import the Licensed IP within the Field of Use and Territory during the Term.

2.2 Non-Exclusive Nature. This license is non-exclusive. Licensor retains the right to: (a) use the Licensed IP; (b) grant licenses to third parties; and (c) assign or transfer the Licensed IP.

2.3 Sublicensing:

☐ Licensee shall NOT have sublicensing rights.

☐ Licensee may grant sublicenses subject to: (a) written sublicense agreements consistent with this Agreement; (b) notice to Licensor within [____] business days; (c) Licensee responsibility for sublicensee acts; and (d) automatic termination upon termination of this Agreement.

2.4 Reservation of Rights. All rights not expressly granted are reserved to Licensor.

ARTICLE 3: FIELD OF USE AND TERRITORY

3.1 Field of Use. Licensee shall use Licensed IP solely within the Field of Use in Schedule A, Section 2.

3.2 Territory. Licensee shall exploit Licensed IP solely within the Territory in Schedule A, Section 3.

3.3 No Exclusivity. Licensor may license others without limitation in the same Field/Territory.

ARTICLE 4: RESTRICTIONS ON USE

4.1 Licensee shall NOT:

(a) Use Licensed IP outside the Field of Use or Territory;

(b) Reverse engineer, decompile, or disassemble Licensed IP unless Licensor approves the activity in writing or applicable law makes this restriction unenforceable in the specific circumstances;

(c) Remove or alter proprietary notices;

(d) Use Licensed IP unlawfully or to infringe third-party rights;

(e) Assign or transfer without authorization;

(f) Use Licensed Marks in a manner causing tarnishment or dilution (15 U.S.C. § 1125(c));

(g) Export in violation of EAR (15 C.F.R. §§ 730-774) or OFAC sanctions;

(h) Engage in misappropriation under Cal. Civ. Code § 3426.1 or 18 U.S.C. § 1836.

4.2 California Unfair Competition. Licensee shall not use Licensed IP in any manner constituting unfair competition under California Business and Professions Code §§ 17200-17210, including any unlawful, unfair, or fraudulent business act or practice.

4.3 Compliance with Law. Licensee shall comply with all applicable federal, California, and local laws.

ARTICLE 5: COMPENSATION AND ROYALTIES

5.1 Compensation Structure (select applicable):

☐ Upfront License Fee: $[________________________________] due within [____] days.

☐ Running Royalty: [____]% of Net Revenue, quarterly within [____] days.

☐ Minimum Annual Royalty: $[________________________________] per contract year.

☐ Per-Unit Royalty: $[____] per unit.

☐ Combination: As in Schedule B.

5.2 Payment Terms. U.S. Dollars by wire transfer. Late payments bear interest at the lesser of [____]% per month or the maximum permitted by California law.

5.3 Taxes. All amounts exclusive of taxes. Licensee responsible for California sales and use taxes (Cal. Rev. & Tax. Code §§ 6001 et seq.) and other applicable taxes.

5.4 No Set-Off. No set-off except as required by tax law.

ARTICLE 6: ACCOUNTING, REPORTS, AND AUDIT RIGHTS

6.1 Reports. Quarterly royalty reports within [____] days: quantity, gross and Net Revenue, royalty calculation, deductions.

6.2 Records. GAAP-compliant records for [____] years.

6.3 Audit. Up to [____] time(s) per year on [____] days' notice by independent CPA.

6.4 Costs. Licensor bears costs unless underpayment exceeds [____]%, then Licensee bears costs. Underpayments due within [____] days with interest.

ARTICLE 7: INTELLECTUAL PROPERTY OWNERSHIP

7.1 Licensor Ownership. Licensor retains sole ownership of Licensed IP under 35 U.S.C., 17 U.S.C., 15 U.S.C., Cal. Civ. Code §§ 3426-3426.11, and 18 U.S.C. § 1836.

7.2 Patent Validity. Nothing in this Agreement prevents Licensee from challenging the validity of a Licensed Patent.

7.3 Goodwill. Goodwill from Licensed Marks inures to Licensor.

7.4 Prosecution. Licensor controls prosecution and maintenance of Licensed IP.

ARTICLE 8: IMPROVEMENTS, DERIVATIVE WORKS, AND EMPLOYEE INVENTIONS

8.1 Ownership (select one):

☐ Option A -- Licensor Owns All: Licensee assigns all Improvements to Licensor.

☐ Option B -- Licensee Owns with License-Back: Licensee owns its Improvements and grants Licensor a perpetual, royalty-free, non-exclusive license.

☐ Option C -- Joint Ownership: Jointly owned; each Party may exploit without accounting.

8.2 California Labor Code § 2870 Compliance. The Parties acknowledge that California Labor Code § 2870 limits the scope of invention assignment provisions. Any assignment obligation under this Article 8 shall NOT apply to any invention that a Licensee employee develops entirely on their own time without using Licensor's or Licensee's equipment, supplies, facilities, or trade secret information, except inventions that:

(a) Relate at the time of conception or reduction to practice to the employer's business, or actual or demonstrably anticipated research or development of the employer; or

(b) Result from work performed by the employee for the employer.

8.3 Written Notice. If Licensee has employees who may create Improvements under this Agreement, Licensee shall provide such employees with a written notice of California Labor Code § 2870 as required by Cal. Labor Code § 2872.

8.4 Disclosure. Licensee shall promptly disclose all Improvements created during the Term.

8.5 Cooperation. Parties shall execute documents to perfect rights under this Article.

ARTICLE 9: QUALITY CONTROL

9.1 Standards. Products and services using Licensed Marks meet Quality Standards in Schedule C.

9.2 Samples and Inspection. Samples upon request; premises inspection on reasonable notice.

9.3 Trademark Usage. Follow guidelines, proper notices, ownership attribution.

9.4 Cure. [____] days to cure quality deficiencies after written notice.

ARTICLE 10: REPRESENTATIONS AND WARRANTIES

10.1 Licensor Warranties:

(a) Right and authority to grant the license;

(b) No knowledge of infringement of third-party rights within Field/Territory;

(c) No pending or threatened challenges to Licensed IP;

(d) No prior exclusive grants conflicting with this license.

10.2 Licensee Warranties:

(a) Authority to enter and perform;

(b) Compliance with California and federal law;

(c) No use harmful to Licensor or constituting unfair competition under Cal. Bus. & Prof. Code §§ 17200-17210.

10.3 DISCLAIMER. EXCEPT AS IN THIS ARTICLE, LICENSED IP IS "AS IS." NO OTHER WARRANTIES INCLUDING MERCHANTABILITY, FITNESS, OR NON-INFRINGEMENT. California Civil Code § 1668 provides that contracts exempting a party from liability for fraud, willful injury, or violation of law are void. This disclaimer shall not be construed to exempt either Party from such liability.

ARTICLE 11: INDEMNIFICATION

11.1 Licensor Indemnification. Licensor indemnifies Licensee from third-party claims arising from: (a) infringement by Licensed IP as provided; or (b) Licensor's breach of warranties.

11.2 Exclusions. No indemnity for claims from: (a) Licensee modification; (b) combination with non-Licensor materials; (c) use outside scope; or (d) use after infringement notice.

11.3 Licensee Indemnification. Licensee indemnifies Licensor from claims arising from: (a) use outside scope; (b) breach of Agreement; or (c) Licensee products/services.

11.4 Procedures. Prompt notice; sole defense control; cooperation at indemnifying Party's expense.

ARTICLE 12: LIMITATION OF LIABILITY

12.1 Consequential Damages. EXCEPT FOR BREACHES OF ARTICLES 4, 7, 11, OR 13, NEITHER PARTY LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES.

12.2 Cap. EXCEPT FOR BREACHES OF ARTICLES 4, 7, 11, OR 13, AGGREGATE LIABILITY NOT TO EXCEED THE GREATER OF: (A) FEES AND ROYALTIES PAID/PAYABLE DURING THE [____]-MONTH PERIOD PRECEDING THE EVENT; OR (B) $[________________________________].

ARTICLE 13: CONFIDENTIALITY AND TRADE SECRET PROTECTION

13.1 California Uniform Trade Secrets Act (CUTSA). The Parties acknowledge trade secret protection under Cal. Civ. Code §§ 3426-3426.11:

(a) Injunctive relief for actual or threatened misappropriation (§ 3426.2);

(b) Damages including actual loss and unjust enrichment (§ 3426.3);

(c) Exemplary damages, at the court's discretion, up to twice the award under § 3426.3(a) or (b) for willful and malicious misappropriation (§ 3426.3(c));

(d) A possible award of reasonable attorneys' fees and costs to the prevailing party if a misappropriation claim was made in bad faith, a motion to terminate an injunction was made or resisted in bad faith, or misappropriation was willful and malicious (§ 3426.4);

(e) Three-year statute of limitations from discovery (§ 3426.6).

13.2 Obligations. Maintain Confidential Information in strict confidence; disclose only to bound personnel; use solely for Agreement purposes.

13.3 Exclusions. Publicly available, previously known, independently developed, or received from third party without restriction.

13.4 Required Disclosures. Permitted if required by law, with prompt notice and protective order cooperation.

13.5 DTSA. Under 18 U.S.C. § 1833(b), an individual is immune from federal or state trade secret liability for disclosure made in confidence to a federal, state, or local government official or an attorney solely to report or investigate a suspected violation of law, or in a complaint or other document filed under seal in a lawsuit or other proceeding. An individual suing an employer for retaliation for reporting a suspected violation may disclose the trade secret to the individual's attorney and use it in the proceeding if every document containing it is filed under seal and it is not otherwise disclosed except by court order.

13.6 Reasonable Measures. Measures consistent with Cal. Civ. Code § 3426.1(d)(2) requirement of "efforts that are reasonable under the circumstances to maintain secrecy."

13.7 Duration. Confidentiality survives [____] years; trade secret obligations continue while information qualifies as a trade secret.

ARTICLE 14: TERM AND RENEWAL

14.1 Initial Term. Commences on Effective Date, continues for [____] years.

14.2 Renewal:

☐ Terminates without renewal.

☐ Renews for [____]-year terms unless [____] days' non-renewal notice.

☐ Renewable only by mutual agreement.

14.3 Patent Expiration. Patent license expires upon patent expiration; no post-expiration royalties. Brulotte v. Thys Co., 379 U.S. 29 (1964); Kimble v. Marvel Entertainment, LLC, 576 U.S. 446 (2015).

ARTICLE 15: TERMINATION

15.1 For Cause. Material breach uncured after [____] days; insolvency; cessation of business.

15.2 Non-Payment. [____] days' notice for payment failure.

15.3 Convenience:

☐ [____] days' notice.

☐ Not applicable.

15.4 Quality Failure. Repeated failures after notice and cure.

ARTICLE 16: EFFECTS OF TERMINATION

16.1 Cessation. Immediately cease use of Licensed IP.

16.2 Return/Destruction. Within [____] days, return or destroy materials; certify in writing.

16.3 Sell-Off. [____]-day sell-off for existing inventory with continued royalties.

16.4 Final Accounting. Within [____] days of termination.

16.5 Survival. Articles 1, 7, 8, 10.3, 11, 12, 13, 16, 19, and 20 survive.

ARTICLE 17: INFRINGEMENT BY THIRD PARTIES

17.1 Notice. Prompt notice of known or suspected infringement.

17.2 Enforcement. Licensor has first right. If Licensor declines within [____] days, Licensee may request permission.

17.3 Recoveries. First to reimburse enforcing Party; remainder split [____]% Licensor / [____]% Licensee.

ARTICLE 18: INSURANCE

18.1 Licensee maintains:

(a) CGL: $[________________________________] per occurrence / $[________________________________] aggregate;

(b) Product liability (if applicable): $[________________________________];

(c) Workers' compensation per California requirements (Cal. Lab. Code § 3700).

18.2 Licensor named as additional insured; certificates upon request.

ARTICLE 19: DISPUTE RESOLUTION AND GOVERNING LAW

19.1 Governing Law. This Agreement is governed by the laws of the State of California, without regard to conflict-of-laws principles.

19.2 Escalation. Senior executives negotiate for [____] days.

19.3 Resolution (select one):

☐ Litigation: Exclusive jurisdiction in state and federal courts in [________________________________] County, California.

☐ Arbitration: Binding arbitration by [________________________________] with [____] arbitrator(s) in [________________________________], California, under the California Arbitration Act (Cal. Code Civ. Proc. §§ 1280-1294.2).

19.4 California State-Court Jury Rights. This document does not itself waive a jury trial in a California state court. After an action is filed there, a party may waive that right only through a method permitted by applicable law.

19.5 Injunctive Relief. Either Party may seek injunctive relief from any California court, including for trade secret misappropriation under Cal. Civ. Code § 3426.2.

19.6 Prevailing Party. In an action on this Agreement, the prevailing Party may recover reasonable attorneys' fees and costs as determined under Cal. Civ. Code § 1717. For a trade secret misappropriation claim, the court may award fees and costs under Cal. Civ. Code § 3426.4 only if the claim or a motion to terminate an injunction was made or resisted in bad faith, or the misappropriation was willful and malicious.

ARTICLE 20: CALIFORNIA-SPECIFIC PROVISIONS

20.1 Business and Professions Code § 16600. The Parties acknowledge that California Business and Professions Code § 16600 voids contracts that restrain a person from engaging in a lawful profession, trade, or business. Nothing in this Agreement is intended to, and this Agreement shall not be construed to, restrain either Party from engaging in any lawful business activity, except to the extent of the license restrictions that are reasonably necessary to protect the Licensed IP.

20.2 Unfair Competition. Neither Party shall engage in any act that constitutes unfair competition under California Business and Professions Code §§ 17200-17210. A breach of this Agreement alone does not establish a claim under § 17200; the challenged business conduct must independently qualify as unlawful, unfair, or fraudulent.

20.3 California Consumer Privacy Act. To the extent the Licensed IP involves the processing of personal information of California residents, the Parties shall comply with the California Consumer Privacy Act (Cal. Civ. Code §§ 1798.100-1798.199.100) as amended by the California Privacy Rights Act of 2020.

20.4 Right of Publicity. If the Licensed IP incorporates any person's name, likeness, or identity, the Parties acknowledge the protections of California Civil Code § 3344 (right of publicity). Licensee shall obtain all necessary consents and releases.

20.5 No Restraint on Employees. Nothing in this Agreement shall restrict any employee of either Party from: (a) engaging in lawful employment after termination of their employment relationship; or (b) using general knowledge, skills, and experience. This Section is included to comply with the policies underlying Cal. Bus. & Prof. Code § 16600.

ARTICLE 21: MISCELLANEOUS PROVISIONS

21.1 Entire Agreement. This Agreement and Schedules constitute the entire agreement.

21.2 Assignment. Licensee may not assign without consent. Licensor may assign freely.

21.3 Notices. Written; effective on delivery, one (1) business day after courier, or three (3) business days after certified mail.

21.4 Force Majeure. Non-performance excused for events beyond reasonable control (not payment).

21.5 Waiver. Written waivers only.

21.6 Severability. If a provision is unenforceable, the remaining provisions remain effective to the extent permitted by law. Under Cal. Civ. Code § 1670.5(a), a court finding unconscionability may decline to enforce the contract, enforce it without the unconscionable clause, or limit that clause's application to avoid an unconscionable result.

21.7 Amendments. Written, signed by both Parties.

21.8 Counterparts. May be executed in counterparts. Electronic signatures valid under the Uniform Electronic Transactions Act (Cal. Civ. Code §§ 1633.1-1633.17).

21.9 Independent Contractors. No employment, partnership, joint venture, or agency. This provision is especially important under California's ABC test for employee classification (Cal. Lab. Code § 2775; Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (2018)).

ARTICLE 22: SCHEDULES

Schedule A: Licensed IP, Field of Use, Territory

Schedule B: Compensation, Royalty Rates, Payment Terms

Schedule C: Quality Standards and Trademark Guidelines

Schedule D: Form of Royalty Report

SIGNATURES

LICENSOR:

Signature: [________________________________]
Printed Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

LICENSEE:

Signature: [________________________________]
Printed Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

SOURCES AND REFERENCES

• California Uniform Trade Secrets Act, Cal. Civ. Code §§ 3426-3426.11
• California Business and Professions Code § 16600 (restraint of trade)
• California Labor Code § 2870 (employee inventions)
• California Labor Code § 2872 (notice requirement)
• California Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200-17210
• California Consumer Privacy Act, Cal. Civ. Code §§ 1798.100-1798.199.100
• California right of publicity, Cal. Civ. Code § 3344
• California Arbitration Act, Cal. Code Civ. Proc. §§ 1280-1294.2
• California reciprocal attorneys' fees, Cal. Civ. Code § 1717
• California Uniform Electronic Transactions Act, Cal. Civ. Code §§ 1633.1-1633.17
• California unconscionability, Cal. Civ. Code § 1670.5
• California worker classification, Cal. Lab. Code § 2775
• Title 17, United States Code (Copyrights)
• Patent Act, 35 U.S.C. §§ 1-390
• Lanham Act, 15 U.S.C. §§ 1051-1141
• Defend Trade Secrets Act, 18 U.S.C. §§ 1831-1839
• Brulotte v. Thys Co., 379 U.S. 29 (1964)
• Kimble v. Marvel Entertainment, LLC, 576 U.S. 446 (2015)
• Lear, Inc. v. Adkins, 395 U.S. 653 (1969)
• Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459 (1992)
• Grafton Partners L.P. v. Superior Court, 36 Cal. 4th 944 (2005)
• Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (2018)
• Whitewater West Industries, Ltd. v. Alleshouse, 981 F.3d 1045 (Fed. Cir. 2020)
• K.C. Multimedia, Inc. v. Bank of Am., 171 Cal. App. 4th 939 (2009)
• Silvaco Data Systems v. Intel Corp., 184 Cal. App. 4th 210 (2010)