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Licensing agreement

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The Licensee and Licensor may be called individually the “Party” or collectively the "Parties." All references to the Licensee and the Licensor in this Agreement shall include, if relevant, the Parties' parent companies, affiliates, and subsidiaries.

This Licensing Agreement (the "Agreement") is made valid upon signature by both Parties (the “Effective Date”)
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DEFINITIONS:

Licensor: the Party who is granting the right to use the licensed property
Licensee: the Party who is receiving the right to use the licensed property
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GRANT OF LICENSE:

The Licensor owns the following property (the "Authored Work"): [Insert detailed description of the property that the Licensee is being given permission to use].
In accordance with this Agreement, the Licensor grants the Licensee an exclusive license to use the Authored Work.
This License provides the limited right to reproduce, publicly display and distribute the Authored Work only for the agreed upon terms set forth in this Agreement and signed by both Parties. The Authored Work used for any purpose not directly related to these terms must be with the express written permission of the Licensor and may include the payment of additional fees unless otherwise agreed to in writing.
The Licensee may use the Authored Work however they see fit, as long as their use is otherwise within the bounds of this Agreement.
The Licensor retains title and ownership of the Authored Work and derivative works will be assigned to the Licensor by the Licensee.
This grant of license only applies to the following described geographical area: [Insert description of the specific geographic area where the Licensee is allowed to use the licensed work].
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ROYALTY PAYMENTS:

‍The Licensee shall pay to the Licensor a royalty which shall be a one-time flat payment of [Insert amount and currency] paid up front at the time the Licensor grants the license to the Authored work to the Licensee.
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MODIFICATIONS:

‍The Licensee may freely make modifications to the Authored Work without any prior approval from the Licensor.
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DEFAULTS:

If the Licensee fails to abide by the obligations of this Agreement, including the obligation to make any royalty payments when due, the Licensor shall have the option to cancel this Agreement by providing [Insert number of days] written notice to the Licensee.
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The Licensee shall have the option of preventing the termination of this Agreement by taking corrective action that cures the default, if such corrective action is taken prior to the end of the time period stated above and if there are no other defaults during such time period.
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CONFIDENTIAL INFORMATION:

‍The term "Confidential Information" refers to any information or materials that are proprietary to the Licensor, whether or not owned or developed by the Licensor, and which the Licensee may obtain through any direct or indirect contact with the Licensor or the Authored Works.

Regardless of whether specifically identified as confidential or proprietary, Confidential Information shall include any information provided by the Licensor concerning the business, technology, and information of the Licensor and any third party with which the Licensor deals, including, without limitation, business records and plans, trade secrets, technical data, product ideas, contracts, financial information, pricing structure, discounts, computer programs and listings, source code, object code, copyrights and intellectual property, inventions, sales leads, strategic alliances, partners, and client lists. The nature of the information and the manner of the disclosure are such that a reasonable person would understand it to be confidential.
The Licensee understands and acknowledges that the Confidential Information has been developed or obtained by the Licensor by the investment of significant time, effort, and expense, and that the Confidential Information is a valuable, special, and unique asset of the Licensor which provides the Licensee with a significant competitive advantage, and needs to be protected from improper disclosure.
In consideration for the receipt by the Licensee of any Confidential Information, the Licensee agrees as follows:

No Disclosure: The Licensee will hold the Confidential Information in confidence and will not disclose the Confidential Information to any person or entity without the prior written consent of The Licensor
No Copying or Modifying: the Licensee will not copy or modify any Confidential Information without the prior written consent of the Licensor.
Unauthorized Use: the Licensee shall promptly advise the Licensor if the Licensee becomes aware of any possible unauthorized disclosure or use of the Confidential Information.
Application to Employees: the Licensee shall not disclose any Confidential Information to any employees of the Licensee, except those employees who are required to have the Confidential Information in order to perform their job duties in connection with the limited purposes of this Agreement. Each permitted employee to whom Confidential Information is disclosed shall sign a non-disclosure agreement substantially the same as this Agreement at the request of the Licensor.
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NON-EXCLUSIVE LICENSE TO LICENSEE:

‍As of the effective date, the Licensor, grants back to the Licensee a non-exclusive royalty free license to use the Authored Work as the Licensor sees fit, for the creation of derivative works.

This license back is only granted if and when the license shall not limit the Licensor rights and public rights under this license.
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WARRANTIES:

‍Neither Party makes any warranties with respect to the use, sale, or other transfer of the Authored Work by the other Party or by any third-party and the Licensee accepts the product "AS IS."

In no event will the Licensor be responsible for direct, indirect, special, incidental, or consequential damages that are in any way related to the Licensee use of the Authored Work.
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TRANSFER OF RIGHTS:

‍This Agreement shall be binding on any successors of the Parties.

Neither Party shall have the right to assign its interests in this Agreement to any other Party, unless the prior written consent of the other Party is obtained.
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TERMINATION:

‍This Agreement may be terminated by either Party by providing [Insert number of days] written notice to the other Party.

This Agreement shall automatically terminate on [Insert date of termination].
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ENTIRE AGREEMENT:

‍This Agreement contains the entire Agreement between the Parties regarding the subject matter of this Agreement, and there are no other promises or conditions in any other Agreement, whether oral or written.
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SEVERABILITY:

‍If any provisions of this Agreement shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable.

If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.
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AMENDMENT:

‍This Agreement may be modified or amended if and only if the amendment is made in writing and signed by both Parties.
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WAIVER OF CONTRACTUAL RIGHTS:

‍The failure of either Party to enforce any provision of this Agreement shall not be construed as a waiver or limitation of that Party's right to subsequently enforce and compel strict compliance with every provision of this Agreement.
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APPLICABLE LAW:

‍This Agreement shall be governed by the laws of the State of [Insert name of state].

Disclaimer: Template does not constitute any form of legal advice, and the User is at all times encouraged to request external specific legal advice in respect of the execution of legal documents.

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What is a licensing agreement?

A licensing agreement is a contract between two parties – a licensor and a licensee - in which the owner of a brand, patent, trademark, or copyrighted material grants permission to another party to use it. The specific type of licensing agreement and what it includes will depend on what is being licensed and on the conditions of the licensing agreement itself.

What should be included in a licensing agreement?

Licensing agreements are straightforward contracts. However, regardless of the specific type of licensing agreement you want, ensure yours contains the elements below to ensure it is robust and works as you need.

A detailed description of what is being licensed. Make it 100% clear what you are licensing. For example, if you are licensing part of a copyrighted work, such as a song or a written text, then be explicit about the specific lyrics or passages you are licensing. To avoid doubt, you may also state that the licensing agreement excludes every other part of the song or text.
Any limitations of use. While licensing agreements often grant permission to use the licensed work however they see fit, you may clarify how it can and cannot be used. For example, you may grant rights for a song to be used in a TV advert but not for social media advertising. Ensure your licensing agreement reflects whatever conditions you want to attach and have agreed to.
Where the licensing agreement applies, are you granting a license for your brand, patent, trademark, or copyrighted material to be used worldwide or only in specific locations?
Royalty payments that are due and the payment structure. Are you licensing your work and being paid a one-off fee upfront, or do you need to design a payment schedule depending on how it is used?
Whether modifications are allowed, decide whether you want to enable the licensee to make changes to your work.
Default conditions. This clause lets you specify how much notice you can give the licensee to terminate the agreement if they fail to fulfill their obligations or contravene things like usage or geographic limitations.
Termination. You can include a break clause in your licensing agreement or apply a specific termination date. If you do the latter, you must renegotiate terms and arrange to sign a new one.
Applicable law. Note the jurisdiction that will govern the licensing agreement; this will also clarify to which courts any disputes will be escalated.
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Licensing agreements also typically include confidentiality clauses. If you use a licensing agreement template, ensure your writing fits your needs. If you want to detail specific confidentiality clauses, you can also draw up a separate non-disclosure agreement.

When should you use a licensing agreement?

You should use a Licensing agreement whenever you grant permission to another party to use your brand, patent, trademark, or copyrighted material. While Licensing agreements are often associated with giving rights to use a song or film footage, they may also be relevant for partnerships between businesses, where you're granting permission for another company to use your brand in its advertising or to sell your product, for example.

Whenever another party wants to use your intellectual property of any description, it’s a good idea to have a Licensing agreement in place.

Why use a Licensing agreement?

There are many reasons why you use a Licensing agreement. As with any contract, using one means you can reduce the likelihood of disputes by being explicit about the terms of use of the licensed thing. In this sense, your licensing agreement makes it easy for the licensee to understand what and how they can use it and for the licensor to check adherence to the agreement if necessary.

When disputes occur, a well-written Licensing agreement should make them easy to resolve, as there shouldn’t be any ambiguity about what conditions apply.

Examples of licensing agreements

One example of a widespread property included in licensing agreements is the likeness of a movie superhero. Toy manufacturers will often license this to sell action figures, which are much more likely to be bought if they are based on a famous superhero. Another typical example is licensing a song for an advertisement campaign or use in a movie. In the fast food market, there are several companies based on the franchise concept, where a franchise holder licenses the rights to the name, products, and advertisement materials from the leading company.

Special considerations

Licensing agreements should only be entered into by consulting a lawyer well-versed in property law. Every licensing agreement is usually individual, so one should be wary of any standardized-looking or non-written agreements.

Where and how to use a licensing agreement

Use a Licensing agreement whenever you need to grant permission to another party to use your brand, patent, trademark, or copyrighted material. Suppose you're a business seeking to use such material that belongs to another party. In that case, you should also insist on a licensing agreement to know you’re legally covered regarding what you want and how to use it.

With Contractbook’s free licensing agreement template, most of your contract is already written for you. You can simply fill in the gaps in our template to quickly create a licensing agreement that works for you or change the other text to reflect better the terms you wish to work within.

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