• What is a license?

A license is an agreement in terms of which a holder of a right allows a third party to use that right, in return for some form of remuneration. The remuneration may take the form of a royalty, a lump sum payment or some combination.  Whether the mode of technology transfer consists of a conventional license or the establishment of a new company, the instrument for transferring the technology will be a license agreement in both cases.

  • CSIR license term sheet 

Prior to embarking on license negotiations, a term sheet should be drawn up, setting out the proposed license terms and parameters, which are to be approved by the Executive Management Committee.

  • Key terms of a license agreement 
  • Licensed Technology – must be properly defined in terms of relevant patents/patent applications, know-how and tangible property (eg software, datapack, etc)
  • Scope of Licensed Rights – what the licensee is entitled to do with the licensed technology (eg make, sell, use, import, etc), and whether this is on an exclusive or non-exclusive basis
  • Field of Use – which field/s or sector/s the licensee may operate in
  • Territory – which countries the licensee may operate in
  • License term – how long the licensed rights will remain valid (in the case of patented technology, this is typically the life of any relevant patents)
  • Consideration – license fees may take the form of a lump sum payment, staged payments, running royalties calculated on a stipulated base (eg net sales), milestone payments, etc – or any combination of these.  An equity stake in the licensee company may in certain circumstances be taken as all or part of the license consideration
  • Diligence provisions – to ensure performance on the part of the licensee (especially important in the case of exclusive licensing)
  • Sub-licensing – is it permitted and under what conditions
  • Prosecution and maintenance of IPRs – whether the licensor or licensee is responsible for decision-making and payment
  • Infringement and enforcement of IPRs – who is entitled to take action against infringers and how will any proceeds realised be shared?
  • Improvements – who owns the rights to improvements made by the licensee (if permitted)? And does the licensee have access to improvements made by the CSIR (and if so, on what terms)? 

This blog is maintained by the CSIR Licensing & Ventures team. Copyright (c) CSIR 2016. All rights to the intellectual property and / or contents of this blog remain vested in the CSIR.
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