A thorough understanding of the IP involved in a transaction is an essential first step to drafting an IP transfer or licensing agreement. The nature of the IP will determine the issues that need to be addressed, and will assist in determining the appropriate scope of the licence. It will also determine the structure of payment and/or royalty provisions.
Careful attention should be given to the rights the licensee wishes to obtain, and the rights the licensor wishes to retain when drafting the grant of the license. The business objectives and outcomes of both parties will help to determine the scope of the license. Considerations include the use granted, territory, term, exclusivity, revocability, sublicensing, termination etc. When deciding if the licence is to be exclusive, non-exclusive or sole, particular attention should be given to ensure that the language chosen is consistent with applicable statutory definitions, and that the agreement is enforceable according to the intentions of the parties.
- Before drafting an IP transfer or licensing agreement, the drafter should have a thorough understanding of the nature of the types of IP to be covered by the agreement.
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