Intellectual Property Licence Agreement

What is an Intellectual Property Licence Agreement?

An Intellectual Property Licence Agreement is a document used by the owner of some form of intellectual property - such as a logo, photograph, or song - to give permission to some other individual to use that property. The Agreement outlines how the Licensor (the Party who owns the property) will grant the licence to use their property to the Licensee (the Party who is using the Licensor's property).

An Intellectual Property Licence Agreement can be used when the Licensor wants to retain some control over the work. They may also want to be able to provide copies of the work to many different Licensees. For example, this might be useful for a photographer that wants to sell copies of a photograph that they took.

What is the difference between an Intellectual Property Licence Agreement and an Intellectual Property Assignment Agreement?

An Intellectual Property Assignment Agreement is somewhat similar to this Intellectual Property Licence Agreement. However, the key difference is that in this Licence Agreement, the owner of the work retains some control over the work (while giving the Licensee permission to use it), whereas in an Assignment Agreement, the original owner of the work is handing over all rights in the work, and all control over the work, to the other party.

Therefore, with an Assignment Agreement, the transferor gives up any control over what happens to the work. The person that receives the work can then do anything they want with it - including copying it, distributing it, publishing it, or whatever else they would like. This may occur, for example, when a graphic designer creates a logo for a client, and has no intention to use the logo again. They may "assign" the logo to the client, so that the client can use it however they like, including modifying it, printing it on various products, and distributing it to whomever they like.

Is it mandatory to have an Intellectual Property Licence Agreement?

No, but if one party is letting another party use their intellectual property, then it is crucial in order to protect the rights of the owner of the intellectual property. It helps ensure that both parties understand the arrangement, as well as managing risks.

What is a Licensor?

This is the person or organisation that owns the intellectual property.

What is a Licensee?

This is the person or organisation that is being given permission to use the intellectual property.

What is an exclusive licence?

This means that only one person or organisation is being given permission to use the intellectual property.

What is a non-exclusive licence?

This means that multiple people or organisations may be given permission to use the intellectual property. For example, this might apply if a photographer is selling multiple copies of a photograph they have taken.

What is derivative work?

This refers to work that the Licensee may create which is based on or derived from the original work. For example, this might apply if someone remixes a song.

What is not allowed in an Intellectual Property Licence Agreement?

Conduct that amounts to "anti-competitive" or "cartel" conduct under the Competition and Consumer Act 2010 (Cth) ("CCA") should not be included in this Agreement.

Terms that restrict competition, control prices, limit market access or deter innovation might amount to anti-competitive or cartel conduct under the CCA. Some of these things used to be permitted in IP contracts under the CCA. However, some amendments to the CCA in 2019 changed this, so that some of these things are now prohibited.

Therefore, if the parties have any concerns at all about whether or not they are going to be affected by these laws, they should strongly consider obtaining legal advice. This Agreement is only designed for use among parties which are not engaging in anti competitive or cartel conduct.

What can be the duration of an Intellectual Property Licence Agreement?

The parties are free to agree on whatever timeframe they like. If the parties specify a timeframe, then once that time runs out, the Licensee's right to use the intellectual property will come to an end. The parties should consider how suitable this would be for their situation. For example, if the Licensee has been printing t shirts and coffee mugs with the image on it, then it would not be practical for the licence to expire at all.

Alternatively, the licence may be ongoing (ie. perpetual). In other words, it may continue indefinitely.

What has to be done once an Intellectual Property Licence Agreement is ready?

Once the document has been prepared, several copies can be printed and signed. The parties can each keep a fully signed copy for their own records.

Importantly, if the Licensor is providing a warranty against defects, then the Australian Consumer Law imposes certain requirements on the Licensor. This includes requirements that warranty documentation be presented in a certain way, that specific information and wording be included in the warranty documentation, and that the mandatory wording be provided with the product itself (rather than the Licensee being referred to information on a website). Therefore, if the Licensor is considering providing a warranty against defects, seek legal advice.

Which documents should be attached to an Intellectual Property Licence Agreement?

It is not mandatory to attach anything in particular to this Intellectual Property Licence Agreement. However, anything that can help identify the intellectual property may be attached. This could include photographs or images if appropriate.

What must an Intellectual Property Licence Agreement contain?

The following things may be included in this Agreement:

• A description of the work being licensed in as much detail as possible.
• Information about whether the licence is exclusive or non-exclusive.
• The geographical area where the Licensee may use the work.
• The duration of the licence (if applicable)
• Information about whether the Licensee is allowed to modify the work or to create derivative works.
• Information about applicable fees.

Importantly, if the Licensor is providing a warranty against defects, then the Australian Consumer Law imposes certain requirements on the Licensor. This includes requirements that warranty documentation be presented in a certain way, that specific information and wording be included in the warranty documentation, and that the mandatory wording be provided with the product itself (rather than the Licensee being referred to information on a website). Therefore, if the Licensor is considering providing a warranty against defects, seek legal advice.

Which laws are applicable to an Intellectual Property Licence Agreement?

There are various pieces of legislation in Australia which may affect intellectual property rights, such as the Copyright Act 1968 (Commonwealth), the Patents Act 1990 (Commonwealth); the Trade Marks Act 1995 (Commonwealth); and the Designs Act 2003 (Commonwealth).

The Australian Consumer Law, which is set out in Schedule 2 of the Competition and Consumer Act 2010 may also apply.

In addition, the common law may apply to intellectual property matters. For example, Australian case law has considered many issues regarding copyright, such as what items are protected by copyright, and how long copyright protection might last.

A Licence Agreement is a contract and general principles of contract law, as provided by the common law, may also apply.

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