Law of Contract and Torts

License agreement

A license agreement is governed by the provisions of Articles 686 to 711 of the Law of Contract and Torts.

By a licensing agreement a licensor shall assume the obligation to assign to a licensee, entirely or partially, the right of use (franchise) of an invention, technical know-how and experience, trade-mark, sample or model, while the licencee shall assume the obligation to pay a specified fee in return.

A licensing agreement must be concluded in written form.

A license for the use of a patented invention, sample or model, shall not be concluded for a period longer than the one covered by statutory protection of such rights.

A licensee shall acquire by licensing agreement an exclusive right of use of the subject of license only after this has been expressly stipulated (exclusive license). Other means of using the subject of license shall be reserved by the licensor.

Should there be no indication in the licensing agreement as to the kind of license, it shall be considered that a non-exclusive license has been granted to him.

Should there be no area limit in the licensing agreement of the right to use the subject of license, license shall be considered as not restricted in terms of area.

Obligations of Licensor

Delivery of the Subject of License

A licensor shall be obliged to deliver to a licensee the subject of the license within the designated time limit.

A licensor shall also be obliged to deliver to a licensee the technical documentation necessary for practical implementation of the subject of license.

Providing Instructions and Information

A licensor shall be obliged to provide a licensee with all instructions and information necessary for the successful use of the subject of license.

Duty of Guarantee

A licensor shall guarantee to the licensee the technical feasibility and technical fitness of the subject of license.

Guarantee

A licensor shall guarantee that the right of use which is the subject of the agreement belongs to him, that there is no lien on it and that it is not restricted in favour of a third person.

Should the subject of agreement be an exclusive license, the licensor shall guarantee that he has not assigned the right of use to another, either entirely or partially.

A licensor shall be bound to protect and defend the right which he has assigned to the licensee against all third parties’ requests.

Duty of a Licensor of an Exclusive License

Should an exclusive license be stipulated, the licensor shall not in any way use the subject of license alone, or some of its parts, nor shall he entrust that to another within the limits of territorial validity of license.

Obligations of the Licencee

Use of the Subject of License

A licensee shall be bound to use the subject of license in the way, within the scope, and in the limits stipulated.

Use of Subsequent Advancements

Unless otherwise determined by law or by contract, a licensee shall not be authorized to use subsequent improvements in the subject of license.

Keeping Secret the Subject of License

Should the subject of license be a non-patented invention or secret technical know-how, the licensee shall be bound to keep it confidential.

Quality

Should a manufacturing license be assigned together with a license concerning the use of a trade-mark, the licensee shall be entitled to put goods with such trademark on the market only if its quality is the same as the quality of goods otherwise manufactured by the licensor. A contrary agreement shall have no effect.

Labelling

A licensee shall be obliged to put an indication on the goods that they are manufactured according to license.

Compensation

A licensee shall be bound to pay to a licensor the fee stipulated, at the time and in the way provided for by the agreement.

Submitting a Report

Should a fee be agreed in relation to the scope of use of the subject of license, the licensee shall be obliged to submit to the licensor a report on the scope of use and to make an annual fee account, unless a shorter time limit be stipulated in the matter.

Changing a Stipulated Fee

Should the stipulated fee be obviously inadequate in relation to the revenue realized by the licensee through the use of the subject of license, the interested party may request a change in the stipulated fee.

Termination of Agreement

Expiration of Time Specified

A licensing agreement for a definite period shall be terminated on expiration of the period stipulated, so that there shall be no need for cancellation.

Implicit Renewal of a License

Should after the expiration of a definite period specified in the licensing agreement the licensee continue to use the subject of license, but the licensor fail to object, a new agreement shall be considered to have been made for the license covering an indefinite period, and under the same terms and conditions as the previous one.

Securities supplied by third parties regarding the first license shall be terminated with the expiration of the validity period of that license.

Notice

A licensing agreement whose validity period is not determined shall be terminated by notice which may be given by either party, after honouring a determined period of notice.

Should the period of notice not be stipulated by agreement, it shall be six months, provided the licensor does not cancel the agreement during the first year of its validity.

Death, Bankruptcy and Regular Liquidation

In the case of death of a licensor, the license shall continue to be effective:

  • for his successors, unless otherwise stipulated by the agreement
  • for his successors continuing his activity.

In the case of a bankruptcy or liquidation of a licensee, a licensor may repudiate the agreement.

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