Clauses to Review Before Commercial Use of Licensed IP

1. Identify the IP precisely

List the trademarks, copyrighted works, software, know how, designs or other rights covered by the licence. For evolving technology or content libraries, define how updates and new versions are treated.

Do not rely only on broad descriptions such as “all company IP” if the commercial arrangement concerns specific assets.

2. Define exclusivity, territory and field of use

An exclusive licence can restrict the owner as well as other licensees. State whether the licence is exclusive, sole or non exclusive and identify the territory, customers, products or field in which use is permitted.

For online use, think beyond geography to platforms, domains and channels.

3. Control sublicensing and affiliates

If distributors, group companies, contractors or cloud providers need access, the agreement should say whether sublicensing or onward use is permitted and on what conditions.

The licensor may require equivalent confidentiality, security or quality obligations from downstream users.

4. Connect fees to measurable use

Royalties can be based on revenue, units, users, territory, minimum guarantees or milestones. Define the calculation base, exclusions, reporting, audit rights, taxes and payment currency where relevant.

Ambiguous royalty definitions can create disputes even where the parties agree on the rate.

5. Plan infringement and termination

State who monitors infringement, who may enforce, who controls litigation or settlement and how costs/recoveries are handled. On termination, address cessation of use, sell off periods, deletion/return of materials and survival of confidentiality or accrued payment obligations.

For trademarks, quality control and brand use rules may be particularly important.

Licence checklist

The agreement should let a third party understand the permitted commercial use without relying on oral explanations.

• Licensed IP and ownership statement.
• Exclusive/non exclusive status, territory and field of use.
• Sublicensing and affiliate rights.
• Fees, royalties, reporting and audit.
• Quality, brand and confidentiality controls.
• Infringement, termination and after termination obligations.