5.8 - Accelerated Licence Agreement (inc low risk Commercialisation)

When should it be used?

• To allow non-commercial use of the IP; or
• For commercial transactions valued at less than $100,000 or agreed by the parties to be low risk; and
• The parties are Australian entities

Whilst it will generally be the university licensing IPR to an industry partner, the agreement is structured so that either party could be the Licensor. The agreement is also suitable when a party is a Commonwealth Entity.

When should it not be used?

• An Accelerated Licence Agreement (inc low risk Commercialisation) is only recommended when both parties decide that the Accelerated agreement is appropriate. If you cannot agree, and the licence is for commercialisation, use of the Licence Agreement (Non-exclusive Commercialisation) is recommended
• For the grant of an exclusive commercial licence to IPR (the Licence Agreement (Exclusive Commercialisation) must be used)
• As a licence arrangement for equipment (use the Equipment Licence Agreement)
• When one party is not an Australian entity

Should I use the Accelerated or Standard Non-Exclusive Licence?

The university and the industry partner should consider the following factors to decide whether to use the Accelerated or Standard licence template for a non-exclusive licence. Independent advice or further information from the other party may be needed to make an informed judgement.

• Will the licence be for uses that do not involve commercialisation? If the licence is for internal use only, then the Accelerated Licence Agreement (inc low risk Commercialisation) must be used. The Research Agreement templates already include a licence to the industry partner for internal use, which will normally be sufficient and in these cases there is no requirement to use this Agreement. If additional coverage is required by the industry partner, the parties should enter into a separate licence agreement using this template
• Are indemnity or warranty provisions needed? If one or both parties require indemnity and/or warranty provisions, then it is recommended that a Standard Licence Agreement is used, as these include standard warranty and indemnity provisions that can be customised as required
• Are the Fees payable expected to be less than $100,000? For many lower value agreements, the Accelerated Licence Agreement (inc low risk Commercialisation) will be appropriate, and will streamline the process of negotiating and finalising an agreement, which can otherwise be costly and time consuming for both parties. Each form of agreement allows for flexibility in how the parties set the Fees - including for royalty payments. However, if the risks in the agreement are high and/or specific risks are identified, the Standard Licence Agreement will be more suitable, for example if:
  • one party is a foreign entity
  • the licence structure or Fees are complex
  • the proposed intellectual property arrangements are complex (for example, multiple types of intellectual property being licensed with different licensing approaches)
  • there are existing arrangements in place between the parties
• What has the internal risk assessment returned? Before starting a commercialisation project, each party should carry out their own risk assessment. Factors to consider include:
  • what is the potential legal exposure that the activity may create?
  • could this activity lead to a breach of intellectual property rights, including patent or copyrights?
  • will this activity involve significant physical or environmental risks?

If the internal assessment indicates a low risk, then the Accelerated Licence Agreement (inc low risk Commercialisation) would be appropriate

This risk assessment may also be used to determine an appropriate liability cap for the agreement. For the Accelerated Licence Agreement (inc low risk Commercialisation), the liability cap would generally not exceed $100,000. If the proposed liability cap is higher than $100,000, the Standard Licence Agreement may be more appropriate

• Are additional arbitration or mediation systems needed: While the parties can always agree to refer their dispute to mediation, there is no mandated mediation or arbitration in the Accelerated Licence Agreement (inc low risk Commercialisation). If this is required, the Standard Licence Agreement should be considered
• Will the licensee be paying a royalty? Either the Accelerated Licence Agreement (inc low risk Commercialisation) or the Standard Licence Agreement can be used with a royalty model. The method for calculating the royalty must be agreed by the parties. If the method is complex, the Standard Licence Agreement is preferred, as it provides more guidance on audit rights and a template that can be adapted for calculation of royalty amounts.  In each case parties should obtain independent financial and taxation advice
• Is sublicensing allowed? In most commercialisation arrangements a licensee may wish to be permitted to sublicense the licensed IP rights to enable commercial exploitation. For example, the licensee may wish to outsource some aspects of manufacturing, service provision or sales.  While this is consistent with options in both the Accelerated Licence Agreement (inc low risk Commercialisation) and the Standard Licence Agreements, it indicates a higher level of complexity and risk. If sublicensing is allowed for these types of activities, then the Standard Licence Agreement is recommended, as this includes template provisions regulating sublicensing, such as provisions which must be included in the sublicence agreement, whether the sublicence must be approved, and management of the risks associated with sublicensing
• Other factors to consider are: whether the agreement is required to address the ownership and/or licensing of any improvements back to the licensor, and whether there are any product safety requirements that need to be addressed.  In general, these factors increase risk and make the Standard Licence Agreement more appropriate

Key considerations when completing the template

The following table is provided as a guide to help the parties appreciate the key considerations that each party will have when negotiating an Accelerated Licence Agreement (inc low risk Commercialisation) using the template.

The template is provided in the Accelerated track and it is expected that it can be used with minimal negotiation between the parties. Nevertheless, discussing and understanding each party’s needs and concerns up front will help you reach an agreement more quickly. A licence agreement may take three to six months or more to negotiate and sign, often longer, depending on the complexity of the proposed licence. It is, therefore, important the parties start these discussions as early as possible.

For organisations, particularly SMEs, that have not previously been asked to enter this type of agreement, this table will help you understand what the key provisions of a licensing agreement are and what you need to discuss and agree in order to finalise the agreement from the template.

Additional plain English guidance on the meaning of key clauses is provided in a separate annotated version of the template.

This table sets out the key points each party needs to consider when licensing IP on a non-exclusive basis using the Accelerated Licence Agreement (inc low risk Commercialisation). Understanding your own key considerations, as well as those of the other party, will help you to negotiate a fair and reasonable agreement that works for both parties.