Patent and Know-How Licence Agreement
This agreement grants a licence to use specified patent rights and associated confidential know-how for defined purposes, subject to restrictions on use, confidentiality, performance and payment. It covers the disclosure, protection and exploitation of intellectual property while preserving ownership, controlling improvements and providing mechanisms for enforcement, termination and registration.
Important notes:
Competition law: Consider UK and EU competition law when granting exclusive licences or imposing field, territory, sublicensing or no-challenge restrictions, particularly if parties are competitors.
UKIPO registration: A licence of UK patent rights should be registered at the UK Intellectual Property Office to ensure enforceability against third parties - see Schedule 3.
Tax and VAT: Make sure to take tax advice on the VAT treatment of licence fees and royalties (particularly cross-border payments or bundled services).
Improvements and inventions: Where Improvements may be created by employees/contractors, ensure separate agreements are in place to secure ownership of such IP.
Export controls and sanctions: Ensure compliance with applicable export control and trade sanctions laws if disclosing or using outside the UK.
Confidentiality: To preserve trade secret protection, ensure Know-How is disclosed only to persons subject to effective confidentiality obligations (including those in Schedule 2).
This agreement should be used where a party wishes to license patented technology together with associated confidential know-how, particularly where the patents alone are insufficient to enable effective commercial exploitation. It is suitable for commercialisation, manufacturing, development or distribution arrangements where ownership of the intellectual property is to be retained by the licensor, but controlled rights of use are granted under UK law.
Patent and Know-How Licence Agreement
This Patent and Know-How Licence Agreement (the "Agreement") is made on [effective date] by and between:
(1) [licensor name], a [legal form of licensor] of [licensor address] (the "Licensor"); and
(2) [licensee name], a [legal form of licensee] of [licensee address] (the "Licensee").
(each a "Party" and together the "Parties").
Definitions and Interpretation
Definitions
In this Agreement, unless the context otherwise requires:
"Affiliate" means, in relation to a party, any entity that directly or indirectly controls, is controlled by, or is under common control with that party, where control means ownership of more than 50% of the voting rights.
"Business Day" means a day other than a Saturday, Sunday or public holiday in England.
"Confidential Information" has the meaning given in clause 4.1.
"Effective Date" has the meaning given above.
"Improvements" means any enhancement, modification or development to the Licensed Patents or Licensed Know-How, whether patentable or not.
"Licensed Field" means [description of field of use].
"Licensed Patents" means the patents and patent applications listed in Schedule 1, together with any continuations, continuations-in-part, divisional applications, reissues, re-examinations and extensions thereof.
"Licensed Products" means products or processes that fall within the scope of the Licensed Patents or that use the Licensed Know-How.
"Licensed Territory" means [licensed territory].
"Licensed Know-How" means all technical, commercial or practical information, data, drawings, designs, formulae, specifications, processes and other know-how owned or controlled by the Licensor and necessary or useful to exploit the Licensed Patents or Licensed Products.
"Net Sales" means gross invoiced sales of Licensed Products less [applicable deductions for net sales].
Interpretation
References to statutes include those statutes as amended or re-enacted.
Clause and Schedule headings do not affect interpretation.
References to including are without limitation.
Technical Information
The Licensor shall make available to the Licensee such Licensed Know-How as is reasonably necessary to enable the Licensee to exploit the Licensed Patents in accordance with this Agreement.
The Licensed Know-How shall be provided in the form and at the times agreed in writing between the parties.
Except as expressly stated, no transfer of ownership in the Licensed Know-How is made.
Improvements
Improvements made by the Licensor shall automatically form part of the Licensed Know-How.
Improvements made by the Licensee shall be promptly disclosed to the Licensor.
Any Improvement created by the Licensee which falls outside the Field but incorporates or is derived from the Know-How shall vest in the Licensor, subject to a non-exclusive licence back to the Licensee for internal use.
[optional ownership structure clause]
Confidentiality
Confidential Information means all information disclosed by one party to the other that is confidential by nature or designated as confidential, including the Licensed Know-How.
Each party shall:
keep Confidential Information confidential;
use it only for the purposes of this Agreement; and
disclose it only to those employees or professional advisers who need to know and are bound by confidentiality obligations.
The obligations in this clause do not apply to information that:
is public other than through breach;
was lawfully known prior to disclosure; or
is required to be disclosed by law or a regulatory authority.
This clause survives termination of this Agreement. Any breach of this Clause 4 shall be deemed a material breach incapable of remedy for the purposes of Clause 10.
Grant of Rights
The Licensor grants to the Licensee a [nature of licence] licence under the Licensed Patents and Licensed Know-How to manufacture, use, sell and otherwise exploit Licensed Products in the Licensed Field and Licensed Territory.
No rights are granted to the Licensee by implication, estoppel or otherwise except as expressly set out in this Agreement.
The Licensee shall not sub-license without the Licensor’s prior written consent [except to Affiliates].
Notwithstanding the foregoing, the Licensee shall be permitted to sub-license without requiring the Licensor's prior written consent solely where such sub-licensing is to [optional permitted sub-licensing arrangements].
Payment
In consideration of the licence granted, the Licensee shall pay the Licensor:
an upfront fee of £[upfront fee amount in £]; and/or
royalties of [% of royalties]% of Net Sales.
Royalties shall be calculated and paid [frequency of payment of royalties] within [requirement payment window for royalties] of the end of each period.
All payments are exclusive of VAT, which shall be payable in addition.
Records and Reports
The Licensee shall keep accurate records of Net Sales.
The Licensor may, on reasonable notice, audit such records no more than once per year.
Performance
The Licensee shall use reasonable endeavours to develop and commercialise Licensed Products.
The Licensee shall comply with all applicable laws and regulations.
Patents
The Licensor shall be responsible for filing, prosecution and maintenance of the Licensed Patents unless otherwise agreed.
The Licensee shall promptly notify the Licensor of any infringement.
The Licensor shall have the first right, but not the obligation, to take action against infringers. The Licensee shall provide all reasonable assistance, information and cooperation required by the Licensor in connection with the enforcement or defence of the Patents, at the Licensor’s cost.
The Licensee acknowledges and consents to the registration of this licence or any formal extract of it at the UK Intellectual Property Office.
Term and Termination
This Agreement shall commence on the Effective Date and continue until expiry of the last Licensed Patent unless terminated earlier.
Either party may terminate for material breach not remedied within [required notice period for termination on material breach] of notice.
On termination:
all licences granted shall cease; and
the Licensee shall cease use of the Licensed Know-How.
Notwithstanding the foregoing, expiry or revocation of all Patents shall not terminate the licence of the Licensed Know-How, which shall continue subject to the confidentiality obligations in this Agreement.
Force Majeure
Neither party shall be liable for delay or failure caused by events beyond its reasonable control.
General
This Agreement constitutes the entire agreement between the parties.
No amendment is effective unless in writing and signed by both parties.
Neither party may assign without the other’s consent, except to an Affiliate.
No Waiver
A waiver of any right shall not constitute a waiver of any other right.
Severance
If any provision is held invalid, the remaining provisions shall remain in force.
Notices
Notices shall be in writing and delivered by hand or pre-paid post to the address above.
Notices are deemed received in accordance with section 196 of the Law of Property Act 1925.
Law and Jurisdiction
This Agreement and any dispute arising out of it shall be governed by and construed in accordance with the laws of England and Wales, and the courts of England and Wales shall have exclusive jurisdiction.
This Agreement has been duly executed as of the date hereof.
Licensor
Name: [licensor signatory name]
Title: [licensor signatory title]
Licensee
Name: [licensee signatory name]
Title: [licensee signatory title]
Schedule 1 – Patent Rights
List patents and applications, for example:
Granted Patent
Title: [X]
Jurisdiction: [X]
Patent Number: [X]
Filing Date: [X]
Grant Date: [X]
Registered Proprietor: [licensor name]
Status: Granted and in force
Pending Patent Application
Title: [X]
Jurisdiction: [X]
Application Number: [X]
Publication Number: [X]
Filing Date: [X]
Applicant: [licensor name]
Status: Pending
Associated Rights
All renewals, extensions, reissues, re-examinations, supplementary protection certificates, divisional applications, continuations, continuations-in-part, priority applications and foreign equivalents of the above patents and patent applications.
Schedule 2 – Secrecy Undertaking
Form of confidentiality undertaking to be signed by employees or contractors, for example:
CONFIDENTIALITY UNDERTAKING
This Confidentiality Undertaking (the Undertaking) is entered into on [date] by and between:
[Name of individual] of [address] (the Recipient)
IN FAVOUR OF:
[Licensor name] and [Licensee name] (together, the Protected Parties).
Background
1.1 The Recipient is or will be engaged by the Licensee (or an Affiliate of the Licensee) as an employee, consultant, contractor or adviser.
1.2 In the course of that engagement, the Recipient may receive Confidential Information relating to the business, technology or intellectual property of one or both Protected Parties.
Definitions
In this Undertaking, Confidential Information means all information (whether oral, written, visual or in electronic form) relating to the business, operations, technology, inventions, processes, know-how, trade secrets, patents, patent applications, products, customers, suppliers or finances of either Protected Party which is confidential by nature or marked or designated as confidential.
Confidentiality Obligations
3.1 The Recipient undertakes that they shall:
(a) keep all Confidential Information strictly confidential;
(b) not disclose Confidential Information to any third party without prior written consent from the relevant Protected Party;
(c) use Confidential Information solely for the purposes of performing their duties for the Licensee; and
(d) take all reasonable steps to protect Confidential Information from unauthorised use or disclosure.
3.2 The Recipient shall not copy, reproduce or reduce to writing any Confidential Information except as strictly necessary for the permitted purpose.
Exceptions
The obligations in clause 3 do not apply to information which the Recipient can demonstrate:
(a) is or becomes public other than through a breach of this Undertaking;
(b) was lawfully known to the Recipient before disclosure;
(c) was lawfully received from a third party without restriction; or
(d) is required to be disclosed by law or by a court or regulatory authority, provided that (where legally permitted) the Recipient gives advance notice to the relevant Protected Party.
Intellectual Property
All intellectual property rights in Confidential Information shall remain vested in the relevant Protected Party. No licence or other rights are granted to the Recipient except as expressly set out in this Undertaking.
Return of Information
Upon request, or on termination of the Recipient’s engagement, the Recipient shall promptly return or destroy all Confidential Information and certify compliance if requested.
Duration
This Undertaking shall continue in force both during and after the Recipient’s engagement, without limitation in time in respect of trade secrets and for so long as other Confidential Information remains confidential.
Remedies
The Recipient acknowledges that damages may be an inadequate remedy for breach and that injunctive or equitable relief may be available.
Governing Law and Jurisdiction
This Undertaking and any dispute arising out of it shall be governed by and construed in accordance with the laws of England and Wales, and the courts of England and Wales shall have exclusive jurisdiction.
[Insert signature blocks]
Schedule 3 – Formal Patent Licence for Registration
Short-form licence suitable for registration at the UK Intellectual Property Office
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England & Wales note
This version is drafted for England & Wales. Scotland and Northern Ireland differ on some points — for example notice periods and tribunal procedure. Tell GitLaw where you hire and it adjusts the draft.
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