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Licensing IP rights—introduction

Drafting IP licences can raise a number of commercial and legal issues, which are often complex and lead to much negotiation. This Practice Note focuses on the key practical points you should consider prior to drafting and during the negotiation of an IP licence (from both a licensor’s and a licensee’s perspective).

Fundamentally, an IP licence is the granting of permission, by a licensor to a licensee, to use IP which the licensee would otherwise be prevented from using.

IP can be used and monetised by its owner in the form of either ‘a carrot or a stick’. Parties may negotiate the terms of a mutually beneficial IP licence, for example to develop new products or penetrate new markets. Conversely, an IP owner may use its IP more defensively and seek to impose settlement licences on, and ultimately receive settlement Fees from, those parties already using its IP without the owner’s consent. Therefore, the starting point, and the wider commercial realities, will significantly shape the negotiation and terms of