Previous articles and papers from IP Draughts have proposed a set of standard contract terms for IP assignments and licences, either by way of UK legislation or a UN convention. These terms would provide a ‘default’ set of rules that would apply to such transactions in the absence of specifically-agreed alternative terms.
Equivalent default terms exist for contracts for the sale of goods, whether under national laws (e.g. the UK Sale of Goods Act 1979 (SGA) or the US Uniform Commercial Code), or under the United Nations Convention on Contracts for the International Sale of Goods (sometimes known as the Vienna Convention).
This article is the first of a series in which IP Draughts goes through his trusty paper copy of the SGA*, section by section, and suggests equivalent terms for IP licence agreements. They are offered merely as first drafts for discussion, rather than anything more deeply considered or settled. Some details are omitted, where they deal with technical issues such as transitional arrangements.
- This code applies to contracts for the licensing of IP made on or after 1 January 2020.
- An IP licence agreement is a contract under which one party, the licensor, grants rights under IP owned by it to another party, the licensee. Where the licence is to be granted at a future date, or subject to a future condition, it is an agreement to license, and becomes an IP licence agreement at the future date or when the condition is met.
- The requirements for a legally-binding contract made under English law, including capacity of the parties, intention to create legal relations, offer and acceptance, consideration, complete agreement and certainty of terms, apply equally to IP licence agreements as they do to other types of contract.
- An IP licence agreement made be made in writing, or orally, or partly in writing and partly orally, or may be implied from the conduct of the parties.
- The IP which is the subject of an IP licence agreement may include patents, trade marks, copyright, design rights [etc] existing anywhere in the World; and may be existing or future IP. To the extent that an IP licence agreement provides for the licensing of future IP, not in existence at the time the agreement is made, it will be treated as an agreement to license and will operate as an IP licence agreement when the IP comes into existence.
- Where there is an IP licence agreement and all of the IP [without the knowledge of the licensor] has expired or otherwise ceased to exist at the time the agreement is made, the IP licence agreement is void.
- Where there is an IP licence agreement and after the date of the agreement all of the IP, [without any fault on the part of the licensor or licensee] expires or otherwise ceases to exist, the agreement is avoided [but allow spreading of know-how royalties over defined period of time?]
- The price to be paid under an IP licence agreement may be fixed by the contract or may be left to be fixed in a manner agreed by the contract. Where a price is not determined in accordancy with the previous sentence, the licensee must pay a reasonable price. Price for this purpose may be or include a royalty based on sales by the licensee.
- Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not of the essence of an IP licence agreement.
- In an IP licence agreement, references to “month” mean calendar month, “person” includes corporations and unincorporated associations, references to a gender include any gender, references to the singular include the plural, and vice versa, references to clauses and schedules mean clauses of, and schedules to, the IP licence agreement, and “including” means “including without limitation”.
* Copied and bound for him by his secretary at Bristows in 1987, along with the Supply of Goods and Services Act 1982 and the Unfair Contract Terms Act 1977. Technically, the paper belongs to Bristows, and the content is Crown copyright. But apart from that it’s mine!