What Are the Main Components of a License Agreement? | Beatoven

License agreements could be tough to understand, especially for laymen. There are 4 main components of a license agreement. Let’s take a quick look at each one below.

1. Identities of Parties

The agreement must specify the legal business names of each parties involved in the transaction. These must be accurate so as to avoid confusion or conflict in the future (complications can sometimes arise as agreements are between subsidiary companies). This section should specify the business structures that are concerned, as well as their names.

2. Grant of Rights

This part specifies who owns the rights to the IP, the specific IP they’re licensing (such as a single musical track or a whole album), and to whom the IP is obtaining license. This should be very elaborate and accurate — any and all involved parties should be listed thus there will not be any disputes in the future.

3. Scope of the Rights Granted

This section lays out the nuts and bolts of the agreement. It should answer queries such as:

How can the licensee be able to utilize the Intellectual Property?

Will they be able to build changes of a certain kind, or none at all?

Where is the agreement geographically valid?

Is the agreement worldwide or only for certain territories? Once it involves music, licensees typically look for worldwide rights, as projects are published on the web and must be universally accessible.

How long does the agreement last?

Is the agreement in perpetuity or only for a restricted time period, such as a year?

These are the extremely important questions, and we’ll explore in bigger depth below what users should be looking for.

4. Termination

Under what circumstances will the agreement be terminated? This section should detail the situations during which the agreement may be voided by the licensor, and the situations where the licensee can be considered in breach of contract. It could also merely lay out the agreement’s expiration date and what the licensee should do if they want to extend or renew the contract.

To sum up, if you’re wondering, “What should be inclosed in a licensing agreement?” the answer is:
A clear and succinct explanation of two parties’ obligations to each other

The territory and the time period quoted in the agreement

The licensee’s should keep up the terms of the agreement

Information concerning licensing fees

Notice regarding the agreement’s expiration date (or how to end the agreement, if the licensee so wishes