September 22, 2023


Advocacy. Mediation. Success.

Products Licensing Agreements – The Essentials

Solution licensing agreements, whether or not the product or service is software, components, or very simple consumer goods, center close to two key lawful regions: deal legislation and trademark legislation. The deal element of the arrangement is quite apparent whilst trademark is an added necessity in this contemporary age (in which generally up to 90% of a product’s benefit is composed of the title or logo on its packaging).

The distributor license – a frequent products licensing agreement – is a intricate arrangement whose drafters have to choose added treatment to delineate each individual party’s legal rights and tasks else highly-priced litigation is the surefire end-result.

This is what a usual distributor agreement must have:

1) The parties (naturally).

2) The Solutions: This is a specific description of just about every party’s obligation to the other. For instance: Social gathering A agrees to distribute software package in New York for get together A. In return, Party B agrees not to license any other get-togethers to distribute the application in New York. Most likely occasion B will also be accountable for updating and delivering shopper warranties for the program? That is ultimately up to the get-togethers…

3) The Payment: Who pays whom? At what intervals? What are the penalties for late payments? Who is responsible for working with the conclusion-client, amassing on invoices, and many others…?

4) Added Warranties: This is where the functions make additional guarantees to one a different. This is also wherever a superior lawyer will anticipate and supply for as many contingencies as feasible: should really an unanticipated contingency take place, expensive litigation will become inescapable (e.g., the distributor’s state passes a new tax on the form of merchandise distributor sells and the agreement fails to offer which occasion bears the load of this new tax). Best Advice: Do not depend on Googled sorts, in particular for large price agreements employ a lawyer who is aware of your market and, consequently, understands what can go incorrect.

5) Proprietary Rights: This is the trademark regulation area. The agreement really should clearly condition which mental assets belongs to which party. Right after various several years of doing the job collectively and working with a single another’s logos on your products, the traces among who owns what can get blurred…

6) Limitation on Liability: This is commonly regular language the place just about every bash agrees not to maintain the other liable for regular failures under the arrangement (you won’t be able to disclaim non-normal failures, like setting hearth to the warehouse).

7) Time period (time): This is self-evident.

8) Termination: This is also extremely crucial and requires sound authorized counsel. How a relationship terminates and what continuing rights and duties the get-togethers have are just as important and litigation-inclined as how the agreement commences.

9) Arbitration and Preference of Law: These are optional but hugely proposed. A strong arbitration clause will ensure that any disagreements go to arbitration. Though arbitration can get high priced, this sort of charges do not occur near the many years-long engagement of movement apply, discovery and appeals you see in regular litigation.

In sum, the primary goal of a well-drafted arrangement is to supply for as numerous contingencies as feasible in get to stay away from future disputes and undoubtedly to prevent high priced litigation around this kind of disputes.