A licence agreement for an IP owner to licence IP Rights (IPR) (including IPR developed as part of a project) on a non-exclusive basis to the other party for commercialisation.
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When should it be used?
- For licensing transactions that include commercialisation rights; and
- The parties have agreed that the Accelerated Non-Exclusive Licence is not appropriate
Whilst it will generally be the university licensing IPR to a company, the agreement is structured so that either party could be the Licensor. The agreement is also suitable when a party is a Commonwealth Entity.
The template assumes both parties are Australian entities. If you wish to use the template for a licence to a foreign entity, you should seek legal advice as to any changes that may be needed.
When should it not be used?
- If the licence does not include commercialisation rights, the Accelerated Licence Agreement (inc low risk Commercialisation) should be used
- For the grant of an exclusive licence to IPR (the Licence Agreement (Exclusive Commercialisation) must be used)
- As a licence arrangement for equipment (use the Equipment Licence Agreement)
Should I use the Standard or Accelerated Non-Exclusive Licence?
The university and the industry partner should consider the following factors to decide whether to use the Standard or Accelerated 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
- Are indemnity or warranty provisions needed? If one or both parties require indemnity and/or warranty provisions, then the Standard Licence Agreement should be used, as it incorporates standard warranty and indemnity provisions that can be customised as required
- Are the Fees payable expected to be more than $100,000? For higher value agreements, the Licence Agreement (Non-exclusive Commercialisation) should be used
- 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?
- is the proposed liability cap higher than $100,000?
If the internal assessment indicates a higher risk, then the Licence Agreement (Non-exclusive Commercialisation) should be used
- 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 used
- 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 Agreements are preferred, as they provide more guidance on audit rights and a template that can be adapted for calculation of royalty amounts
- 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 Agreements are recommended, as they include 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 Agreements 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 a licence using the Licence Agreement (Non-exclusive Commercialisation) template.
The template is provided in the Standard track 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 Licence Agreement (Non-exclusive 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.
Key points | Licence Provision | University (Licensor) | Industry partner (Licensee) |
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Term / Period (Schedule 1) |
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Licence Scope and Sublicensing (Schedule 1) |
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Licence Application & Territory (Schedule 1) |
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Licensed IPR & Technology (Schedule 2) |
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Confidential Information (Schedule 2) |
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Improvements (Schedule 1) |
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Warranties (Schedule 1) |
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Royalties & Licence Fees (Schedule 3) |
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Performance criteria (Schedule 4) |
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Liability cap (Schedule 1) |
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Insurances (Schedule 1) |
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Dispute Resolution (Schedule 1) |
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