How to Value a Licensing Agreement

Review licensing agreements carefully before signing.

Licensing agreements are written documents establishing permission. The permission may confirm the use of a trademark or a business arrangement. Valuing a licensing agreement depends upon the content of the agreement, the dates on the document and warranties. Licensing agreements may also contain legal remedies to contractual disputes, contractual waivers, outlines of approved materials and the acknowledgment of copyright and ownership to specified persons.

Instructions

1. Examine the content of the licensed materials portion of the agreement. Read and ensure all grants of licensure favor each party in necessary and appropriate ways. Set parameters for who is approved to use the materials and that only the original license holder maintains any exclusive privileges. Additionally, be sure exclusive and/or non-exclusive provisions are outlined and determined here. The content of the licensed materials section is outlined at the start of the agreement.

2. Identify the term. The term establishes the dates where in the agreement is valid. Ensure the dates, renewals and extensions and all additional agreement terms are confirmed and approved in this section. The term of the agreement is located at approximately the half way point of the document.

3. Read over all early termination and/or warranty clauses. Look for acceptable language identifying terms and conditions for early termination. Make sure that there is an established set of time for a party who breaches the agreement to reconcile before legal action is considered. Warranty language should also determine the indemnification statutes for licensors and licensees. Early termination and warranty clauses are located near the middle or at the bottom of the written agreement.

4. Identify original signatures of both the licensor and licensee. Authenticate the document by notary, if necessary. Original signatures and dates must be included on all valid copies of a licensing agreement.

References

• Yale: Licensing Agreement Example
• Business Dictionary: Licensing Agreement