The Parts of a Licensing Agreement

There are essentially two major parts to any (well-written) license agreement.

The First part of the license agreement deals with “General Terms”.

General terms comprise the “Legal” stuff, and includes a “preamble”, along with terms describing indemnification, liability, termination and the like.

The second part of the license agreement is the “Grant

The grant contains terms that are unique to each individual license, and covers very important details such as royalty amounts, license term, territory, licensed use for the artwork, schedules, artwork descriptions and art master delivery format and similar deal points. Both sections (general terms + grant) must be present and should not be weighted heavily in favor of either party.

It should be noted that whomever drafts (writes) the agreement will likely include language that is weighted in their favor. This is normal in the world of contracts and is something you, your agent, and your attorney must be alert to, and ready to negotiate.

License Agreements – What You Need to Know

  • you need to know how to determine if a license is a “good” or a “bad” license for you
  • …which means you need to know how to read a standard license agreement (contract); or be prepared to pay an Intellectual Property (IP) attorney or other appropriate business management professional to do it for you.
  • Important: if you decide to create or to use your own standard contract, then it must be reviewed/approved beforehand by your attorney. Additionally, if the Licensee attempts to add any unusual terms or requests to modify language, those revisions must always be reviewed by your attorney. Sometimes, you may not know as much as you think you do – and you could end-up being liable for the licensee’s mistakes, not being paid, or even using the ability to use your own copyright for other projects, or worst case, signing-over your copyright to the licensee!