The main content of a licensing agreement (li-xăng) includes various key elements that need to be carefully negotiated. These elements are crucial to establish a clear and legally binding contract.
Identification of Parties
One of the initial concerns in negotiating a licensing agreement is to identify the parties involved. This is crucial to ensure clarity and to prevent future disputes over the nature of the contracting parties.
Subject Matter of the Agreement
This section defines what product or process will be produced, used, or sold under the agreement. It may also specify if there are any patents or intellectual property rights associated with the product or process. Additionally, it may describe the technical know-how to be provided, if any, and the conditions under which technological advancements will be shared.
Limitations and Non-Compete Clauses
Licensing agreements often include limitations on authorized activities such as production, sale, or usage, including territorial restrictions, quantity restrictions, or pricing restrictions. These restrictions should be clearly defined in the contract. Any clauses that go against anti-trust or anti-competition regulations may be considered void.
Exploitation
This section covers issues related to product quality, production volume, subcontracting, importing, and distribution channels. The licensor may want to ensure that the technical know-how provided is fully utilized to meet the agreed-upon objectives, often through a “technical warranty” clause.
Dispute Resolution
Dispute resolution mechanisms and applicable laws should be specified in the contract. The parties can choose to resolve disputes through negotiation, mediation, arbitration, or litigation. Selecting the right dispute resolution method is essential for prompt and effective resolution.
Contract Duration
The contract should outline the start date, effective duration, and termination conditions. Intellectual property rights can typically be licensed for a maximum duration (e.g., patents are often licensed for a maximum of 20 years). However, the contract may specify a shorter duration and reserve the right to terminate the agreement under specific circumstances.
