A licence agreement (licentieovereenkomst) gives someone permission to use your intellectual property right, on your terms, while you keep ownership of the right itself. Under Dutch copyright law, an exclusive licence must be set out in a written agreement, just like a transfer of the right. A non-exclusive or sole licence does not have that formal requirement, but it is still wise to put it in writing.

The agreement should cover three things: the type of licence (exclusive, sole, non-exclusive or open), its scope (which right, for which products, in which territory and for how long) and the consideration you receive for it – a lump sum, a royalty per unit, or a share of turnover, together with the audit rights that make a royalty payment verifiable. Get any one of these wrong, and you risk a dispute over what you actually agreed.

What counts as intellectual property?

Intellectual property rights protect the results of creative or technical work, such as copyrights, trademarks, patents and trade names. Each type has its own source of law: copyright follows from the Copyright Act (Auteurswet), trademarks are protected under the Benelux Convention on Intellectual Property (BVIE), patents under the Patents Act 1995 (Rijksoctrooiwet 1995), and trade names under the Trade Names Act (Handelsnaamwet). Every one of these rights differs in how you obtain it, how long it lasts and how you enforce it.

What they have in common is that they are exclusive rights: only the holder may use them, unless it gives someone else permission. A licence is how you give that permission without giving up the right itself. You can grant a licence verbally or in writing, but a written licence agreement is strongly advisable, both to make your rights easier to enforce and to avoid disputes about what was agreed. For an exclusive copyright licence, a written agreement is even required by law.

What should the licence agreement regulate?

A licence agreement is concluded between the licensor (the holder of the right) and the licensee (the party that obtains the licence). As long as the licensee keeps to the agreed terms, the licensor will not invoke its right against it. Because the agreement limits what the licensee may do, and protects what you keep for yourself, several elements deserve attention before you sign.

Who are the parties, and what is the scope?

Name the parties in full, using their official statutory names, not a trading name or abbreviation. If a group company is involved, decide carefully which entity within the group is actually entitled to use the licence, since a licence to one group company does not automatically extend to its affiliates.

Describe the scope in detail: which right is licensed (for example a trade name, software, or a patent, including its application or registration number), how the licensee may use it (use only, or also sub-licensing and exploitation), in which territory it may be used (for example the Netherlands, the Benelux or the whole of Europe), and for how long. Take into account any time limit that already applies to the underlying right, such as the term of a patent or trademark registration.

Which type of licence fits your situation?

The agreement should state clearly what kind of licence it is. The four most common types are:

Exclusive: only the licensee may use or exploit the right; the licensor cannot license it to anyone else and, depending on what you agree, may not use it itself either.
Non-exclusive: the licensor may still license the right to others and keep using it as well.
Sole: a middle ground, where one licensee and the licensor may both use the right, but no one else.
Open: anyone who meets the stated conditions receives a licence.

An exclusive licence often commands a higher fee, but it is not automatically the best choice. If you expect the licensee to commercialise your idea or product and it does not, an exclusive licence can leave your right unused for as long as the agreement runs. Setting minimum obligations for the licensee, such as a minimum sales effort or minimum royalty, helps prevent that outcome.

An illustrative example: a small design studio grants an exclusive licence for its logo design to one manufacturer, without agreeing on any minimum use. The manufacturer never brings a product to market, and the studio cannot license the design to anyone else for the full term of the agreement. A minimum obligation, or a right to terminate if nothing happens within a set period, would have prevented this.

What else belongs in the agreement?

A few further points are usually worth arranging:

The fee: a fixed periodic amount, a royalty (for example a percentage of turnover) or a one-off lump sum, including what happens if payment is late and, for a royalty, your right to audit the licensee’s figures.
Applicable law and dispute resolution: which law governs the agreement, which court has jurisdiction, or whether arbitration or mediation applies instead.
Confidentiality of the information the parties exchange under the agreement, both during its term and after it ends.
Enforcement against infringement: a licensee generally cannot take legal action against an infringing third party on its own, so arrange this specifically if you want the licensee to be able to do so.
Transferability of the licence: if you do not want the licensee to pass it on to another party, say so explicitly in the agreement.
Know-how: confidential technical knowledge that is not covered by a patent can be licensed alongside the intellectual property right, in the same agreement.
New developments: agree in advance whether improvements the licensee makes to the licensed product are covered by the licence, and whether you as licensor benefit from them, for example through a non-exclusive licence back to you.

How do you end a licence agreement?

Set a fixed term, an indefinite term with a notice period, or both: a fixed term that automatically renews unless either party gives notice. Also agree on what happens to stock, sub-licences and confidential information once the licence ends, so that the end of the agreement does not become a dispute in itself.

Frequently asked questions

Do I have to register a licence agreement? No, but registering a trademark or patent licence in the relevant register can make it easier to invoke the licence against third parties, and is worth considering for a valuable or long-running licence.

Can I grant a licence for a right I do not yet have? You can agree on a future licence, for example for a patent application that has not yet been granted, but make clear in the agreement what happens if the right is never granted at all.

What if the licensee breaches the agreement? That depends on what you agreed: the contract can give you a right to terminate, to claim damages, or both. Without clear agreements on this point, you fall back on the general rules for breach of contract.

In summary

A licence agreement lets someone use your intellectual property right without you giving it up.
Put an exclusive licence in writing; Dutch copyright law requires this.
Set out the type of licence, its exact scope, the duration and the fee.
Decide who may act against infringement, whether the licence can be transferred, and what happens to new developments.
Agree in advance how and when the agreement ends, and what happens afterwards.

Unsure where you stand? Tell us about your situation. We will let you know your options within one working day.

How Law & More can help you with this is explained on our corporate lawyer page.