IP Licensing Agreements

Licensing allows others to use your trade marks, software, content, technology or know-how while you keep ownership, usually in exchange for fees or royalties. A well-drafted licence protects your IP, your revenue and your reputation. A poor one can lead to lost control, disputes and unexpected tax and exchange control consequences.

Licence or assignment?

An assignment transfers ownership permanently. A licence grants permission to use the IP while the owner keeps it. Licences can be exclusive, sole or non-exclusive, and limited by field, territory and time. Assignments of copyright and exclusive copyright licences must be in writing.

Quality control protects your brand

Use of a trade mark by a licensee generally counts as use by the owner if the owner controls the use, for example through quality standards. Without real control, the owner risks weakening the mark and losing its distinctiveness.

We act for:

Key terms we get right.

1. Scope
   Exactly what is licensed, for which products, in which territory and for how long, and whether the licence is exclusive.
2. Payment
   Upfront fees, royalties, minimum guarantees, reporting and audit rights.
3. Control and quality
   Brand standards, approval rights and obligations to protect the IP and report infringements.
4. Ownership of improvements
   Who owns developments and improvements made by the licensee during the licence.
5. Termination and exit
   Breach, change of control and insolvency triggers, and what happens to stock, data and use when the licence ends.

Royalties paid to non-residents are generally subject to a 15% withholding tax, which a tax treaty may reduce, and cross-border IP transactions can raise exchange control questions. Section 23I of the Income Tax Act can also limit deductions for certain royalties. These issues should be considered at the structuring stage, not after signature.

Helpful information for a first meeting.