This is not a substitute for legal advice.  An attorney must be consulted.

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Licenses result from the transfer of a portion of the rights in a particular intellectual property asset from one party to another.  The party who originally owned the intellectual property is typically referred to as the licensor.  The party receiving the intellectual property rights is typically identified as the licensee.

Licenses may arise in a variety of contexts and take many different forms.  One type of license is an express license, which results from an actual agreement between the licensor and the licensee.  An express license is what is typically meant by the usage of the term "license."  Express licenses may be in the form of an oral or a written agreement. 

An implied license arises from the objective manifestations of the parties.  Because terms of an implied license are not expressly agreed to, courts typically find that any express license controls, and will only find an implied license when no express license exists.  One particular type of implied license is a shop right.  An employer receives a shop right, which is a royalty-free, non‑exclusive, and non‑assignable license, to intellectual property created by an employee who used the employer's resources or facilities.

While a particular form is not required to create an enforceable license, it is desirable to organize the license in a logical manner to minimize disputes relating to the scope of the license.  One of the preliminary aspects in preparing a license is to select a title for the license.  Next, the license should identify and provide the address for each of the parties involved in the licensing.

The license should set forth a description of the intellectual property rights that are being licensed and the terms under which the rights are being licensed.  Identifying the scope of the licensed intellectual property is particularly important when less than all of the claims in a patent are being licensed or when less than all of the "bundle of rights" in a copyright are being licensed.  When licensing trademarks, the license must include provisions for the licensor to monitor the quality of the licensee's use of the trademark.

When addressing the financial aspects of a license, the parties should evaluate how the licensed intellectual property affects the value of goods or services, such as making goods more appealing to consumers or less expensive to manufacture.  Compensation may be in the form of a lump sum payment, periodic royalty payments, or a combination thereof.  One factor affecting the most appropriate compensation plan is whether the future value of the intellectual property is ascertainable.

Another provision that is frequently included in licenses is a most favored licensee clause.  Through the most favored licensee clause, the licensee seeks to prevent the licensor from granting other licenses on more favorable terms.  However, to exercise the most favored licensee clause, the licensee must accept the subsequent license terms in their entirety.

Example forms for a written license of patent and trademark rights are attached as part of this program.  These forms should only be the starting point for preparing the written agreement, and should be particularized based on the unique requirements of each of the parties.