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Know-How License Agreement

Date : 5/3/2009  
State:  All States  
Category:  Business-Letters 
Know-How License Agreement

THIS AGREEMENT, made, entered into, and effective this [date],
by and between [name] (Licensor) and [name] (Licensee):


W I T N E S S E T H:


WHEREAS, Licensor is the owner of certain know-how incorporated
in Proprietary Data (as hereinafter defined) useful in the development,
production, and use of certain Products;


WHEREAS, Licensee wishes to obtain from Licensor the right to
use the Proprietary Data in connection with the development, production,
and use of Products; and


WHEREAS, Licensee further desires to obtain design and engineering
assistance from Licensor from time to time in connection with
the development, production, and use of Products and to engage
Licensor as a consultant for that purpose;


NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:


Section 1


DEFINITIONS


As used herein, the following terms shall have the following
meanings:


1.01. Licensed Territory. [Designate territory].


1.02. Products. [Designate products, such as particular named
software programs.]


1.03. Proprietary Data. Unpublished "know-how," which shall
include (without limitation) computer program designs, algorithms,
subroutines, system specifications, test data, charts, graphs,
operation sheets, and all other technical information, owned by
Licensor or under Licensor's control, relating to the development
and production or use of Products and the design, configuration,
programming, and protocol of the Products.


1.04. Royalty Revenues. (1) Licensee's gross revenue received
by Licensee with respect to the use, distribution, licensing,
or other transfer by Licensee for value of Products, less trade
discounts, commissions, and transportation costs actually and
reasonably allowed or incurred (but Royalty Revenues shall not
include fees or proceeds resulting from the preparation, licensing,
distribution, or support of any modification, correction, update,
or enhancement of the Products) and (2) gross royalties and other
payments received by Licensee with respect to sublicenses granted
by Licensee pursuant to this Agreement. To the extent Licensee
may prepare, license, distribute, or support any Product in a
modified, corrected, updated, or enhanced form, the fees or proceeds
attributable to the Product, as distinguished from fees or proceeds
attributable to the modification, correction, update, or enhancement,
shall be prorated in good faith by Licensee based on the fair
market of each component, and such portion of fees and proceeds
shall be deemed revenues received with respect to the distribution
and licensing of the Products.


1.05. Annual Period. Each period of twelve months from [date]
until [date], inclusive.


Section 2


LICENSE GRANTED


2.01. Grant of License of Proprietary Data. Licensor hereby
grants to Licensee, and Licensee hereby accepts, a perpetual,
nonexclusive, and irrevocable right to use and employ the Proprietary
Data in the development, production, modification, use, and distribution
of the Products in the Licensed Territory and the right to sublicense
others to do so on the same terms as set forth in this Agreement.
Subject to the provisions of this Agreement, Licensee is authorized
to modify, correct, and enhance the Proprietary Data as it may
deem appropriate, and Licensee shall be entitled to exclusive
ownership and control of the resulting modification, correction,
or enhancement, including any patent rights available with respect
thereto, any trade secrets pertaining thereto, and any copyrights
subsisting therein as derivative works, but only to the extent
that they shall be separate and clearly distinguishable from the
underlying work.


2.02. Grant of License to Product Rights. In connection with
the rights granted to Licensee, Licensee shall receive a perpetual,
nonexclusive, and paid-up license to all proprietary technology
that Licensor may own or control relating to Products, including
patents, patent applications, trade secrets, know-how, license
rights, and copyrights therein.


2.03. Right to Sublease. The foregoing rights include the right
to sublicense the proprietary data to third parties for reasonable
compensation and under terms that maintain the confidentiality
of all Proprietary Data.


Section 3


PROPRIETARY DATA


3.01. Disclosure and Transfer of Proprietary Data. Licensor
shall furnish to Licensee the Proprietary Data in a form sufficient
to enable Licensee to use and practice the Proprietary Data and
to modify, use, and transfer Products.


3.02. Confidentiality Obligations. Licensee shall use Licensee's
best efforts, consistent with the efforts Licensee uses to protect
Licensee's own most valuable and sensitive trade secret data,
to maintain the confidentiality of all Proprietary Data. Such
confidentiality obligations shall not apply, however, to Proprietary
Data (1) in the public domain at the time of its use or disclosure;
(2) already known by Licensee at the time is as made available
by Licensor; (3) independently developed by Licensee; (4) required
to be disclosed pursuant to official process, order, or demand
so long as Licensor shall be given prior notice of such official
process, order, or demand adequate to enable Licensor to oppose
the same; or (5) necessarily disclosed in the marketing and sale
of Products.


3.03. Copying of Master Copy. Within [number] days after the
execution of this Agreement. Licensor shall make available to
Licensee a master copy of each software program included within
the Proprietary Data, including both source and object code thereto
and all available system documentation, in the form then existing,
for reproduction by Licensee at Licensee's cost. To the extent
reasonably possible, each master copy will be in a form reasonably
suitable for copying. Since it may not be practical or desirable
to duplicate all of the Proprietary Data, Licensor, during the
term of this Agreement, shall cooperate with Licensee in providing
all further Proprietary Data and documentation that Licensee from
time to time specifically requests.


3.04. Consultation by Licensor. Licensor, at Licensee's request,
will evaluate information supplied by Licensee with respect to
a specific use, design, or modification of a Product and provide
consultation and advice based on Licensor's evaluation. If Licensee
wishes to engage Licensor to perform design, development, testing,
or other work relating to Products, Licensee will specify the
work that is desired to be performed and request a quote for such
work from Licensor. In response to such request for evaluation
or development, Licensor will prepare an estimate of the time
and cost required by Licensor to perform such work, and, if Licensee
accepts such estimate, Licensor shall proceed accordingly. The
results of such work shall become Proprietary Data for all purposes
under this Agreement.


Section 4


TECHNICAL AND DEVELOPMENT ASSISTANCE


4.01. Licensor, on such terms as may be mutually agreeable to
the parties, shall assist Licensee in the development and use
of the Products by providing to Licensee's personnel such instruction
and advice as Licensee shall reasonably request. Licensor, upon
Licensee's request, shall arrange for Licensee to obtain the services
of a consultant in the Licensed Territory who, in Licensor's opinion,
is qualified to provide technical advice and instruction relating
to Products. Licensee shall engage and shall pay all fees and
expenses associated with such consultant.


Section 5


PAYMENTS TO LICENSOR FOR LICENSEES


5.01. With respect to the Licenses granted herein, Licensee
shall pay to Licensor:


a. An initial disclosure fee of .......... dollars ($..........).


b. Additional payments of .......... percent (.....%) of Royalty
Revenues from the distribution by Licensee of


Products within the Licensed Territory;


c. Additional payments of .......... percent (.....%) of all
Royalty Revenues with respect to sublicenses to the


Proprietary Data granted by Licensee.


5.02. Upon expiration of [number] years from the effective date
of this Agreement, all royalty obligations shall expire and all
rights and licenses granted hereunder shall become fully paid
up.


Section 6


TERM OF AGREEMENT


6.01. The term of this Agreement shall be for [number] years,
commencing on the effective date hereof. Notwithstanding termination
of this Agreement, the licenses granted in Section 2 shall remain
in effect in accordance with their terms.


Section 7


REPORTS; PAYMENTS; RECORDS


7.01. Initial License Fees. Upon the effective date of this
Agreement, Licensee shall pay Licensor the initial disclosure
fee owing under Section 5.1(a) by certified cheque.


7.02. Continuing Royalties. From and after the time that Licensee
has Royalty Revenues, Licensee shall furnish Licensor with a report,
on or before the first day of each calendar [month; quarter] of
each Annual Period, setting forth in reasonable detail the applicable
Royalty Revenues during the preceding calendar [month; quarter].
Concurrently with each report, Licensee shall pay to Licensor
the amount of royalty payments indicated as due in such report.


7.03. Books and Records. Licensee shall keep accurate records
and books of account indicating in detail the Products distributed,
licenses to the Proprietary Data granted, and the Royalty Revenues.
Such records and books of account shall be open to examination
at all reasonable times by representatives of Licensor. Licensee
shall permit Licensor's representatives to take excerpts from,
and make copies of, any entries therein. Licensee shall furnish
such other reports as may from time to time be reasonably requested
by Licensor, provided that the requisite information is reasonably
available to Licensee and properly relates to transactions under
this Agreement.


Section 8


TECHNOLOGICAL MATTERS


8.01. Representations of Licensor. Licensor represents and warrants
to and for the benefit of Licensee, Licensee's sublicensees hereunder,
and transferees of Products that:


a. Licensor has full right, and interest in and to the Proprietary
Data, free and clear of any encumbrance, charge, or restriction;


b. Licensor has the right and authority to enter into this Agreement
and confer to Licensee the rights granted by this Agreement;


c. The Proprietary Data to be conveyed or disclosed to Licensee
pursuant to this Agreement is sufficient to enable Licensee to
[designate tasks to be performed by Licensee]; and


d. No consent, approval, or authorization of or filing with
any public or governmental body on the part of Licensor is required
in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated thereby.


8.02. Protection of Confidential Information. Licensor and Licensee
acknowledge and agree that the Proprietary Data comprises commercially
valuable technology, the design and development of which reflect
the effort of experts and the investment of substantial time and
money. Licensor and Licensee both recognize that the continued
value of the Proprietary Data depends on the preservation and
enforcement of the trade secrets, copyrights, and other proprietary
interests embodied therein and to be embodied in Products developed
pursuant to this Agreement. Therefore, Licensor and Licensee agree,
for their mutual benefit, to apply their reasonable efforts to
protect and defend the trade secrets and copyrights in the Products
against unauthorized use or infringement. Licensor and Licensee
shall each take reasonable steps to ensure that all persons afforded
access to the Products protect the Products against unauthorized
use, dissemination, disclosure, reproduction, or distribution.
Licensee shall impose and enforce consonant restrictions upon
any sublicensees of the Proprietary Data. Furthermore, Licensor
and Licensee shall each reproduce and include in all copies of
Products appropriate copyright legends and proprietary restrictions.


8.03. Patentable Improvements.


a. Licensor shall advise Licensee in writing of any improvements
to Products of which Licensor becomes aware during the first [number]
years after the effective date of this Agreement that are or may
be patentable under the laws of the United States, including any
such improvements made by any employee of Licensor or by any contractor
of Licensor to whom Licensor has contracted work relating to the
Products. Within a period of [number] days after each such notification,
Licensee shall notify Licensor in writing as to whether or not
Licensee intends to file for patent protection on such inventions
or improvements. Licensee's failure to notify Licensor of an election
to file for patent protection within the [number]-day period shall
constitute an election of Licensee not to file for patent protection.
If Licensee elects not to file for patent protection on any such
inventions or improvements, or to file for protection on any inventions
or improvements only in certain countries, Licensor shall have
the right to file for patent protection in any and all countries
in which Licensee has not elected to file; provided, however,
that, if Licensor obtains patent rights in any country within
the Licensed Territory of this Agreement, this Agreement shall
be construed to grant Licensee a royalty-free, nonexclusive, nontransferable
license to make, use, and sell under such patents within such
country for the full life of the patents, and Licensor shall take
such further actions and prepare and


furnish such further instruments as Licensee may reasonably request
to confirm the same.


b. As to any countries in which Licensee elects to file for
patent protection on any inventions or improvements and thereby
obtains patents, Licensee shall grant to Licensor, at Licensor's
request, an irrevocable, royalty-free, nonexclusive license to
make, use, or sell under such patents within such countries for
the life of such patents.


Section 9


INDEMNIFICATION


9.01. By Licensor. Licensor shall indemnify, defend, and hold
harmless Licensee from and against any and all claims, demands,
or actions and any losses, expenses, and damages resulting directly
therefrom (including court costs and reasonable attorney fees)
(1) based on a claim against Licensee that the Proprietary Data
infringes or abridges a third-party right in Australia in a validly
issued patent, copyright, or trade secret and (2) based on an
error in the representations made pursuant to Section 8.01. Any
such indemnification by Licensor pursuant to (1) above shall be
contingent upon Licensee giving Licensor prompt written notice
of the claim for which indemnification is sought, Licensee allowing
Licensor to control the defense and/or settlement of such claim,
and Licensee cooperating with Licensor in such defense and/or
settlement.


9.02. By Licensee. Licensee agrees to, and shall, indemnify,
defend, and hold harmless Licensor from and against any and all
claims, demands, or actions and any losses, expenses, and damages
resulting directly therefrom (including court costs and reasonable
solicitor fees) based on any use, modification, or distribution
by Licensee of the Proprietary Data or Products. Any such indemnification
by Licensee pursuant to this subsection shall be contingent upon
Licensor giving Licensee prompt written notice of the claim for
which indemnification is sought, Licensor allowing Licensee to
control the defense and/or settlement of such claim, and Licensor
cooperating with Licensee in such defense and/or settlement of
such claim.


Section 10


MISCELLANEOUS


10.01. No Agency. It is understood that, in giving effect to
this Agreement, Licensee shall not be deemed to be an agent or
employee of Licensor for any purpose, and Licensee's relationship
to Licensor shall be that of an independent contractor, Licensee
shall not have the right to enter into contracts or to incur expenses
or liabilities on behalf of Licensor.


10.02. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of [state].


10.03. Binding Effect; No Assignment. This Agreement shall be
binding upon and inure to the benefit of Licensee and Licensee's
respective successors and assigns. Licensor may not assign Licensor's
rights under this Agreement, or delegate Licensor's obligations,
without the prior written consent of Licensee (which consent shall
not be unreasonably withheld or delayed), and any such assignment
or delegation in the absence of such consent shall be void.


10.04. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof,
and it integrates all prior statements and agreements respecting
the same. This Agreement may be amended only by a document executed
by both parties purporting to effect such an amendment.


10.05. Survival of Terms. The provisions of Sections 7 and 8
of this Agreement shall survive termination of this Agreement
for any reason.


IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective authorized representatives.


[name]


Licensor


By: [signature]


[title]


[name]


Licensee


By: [signature]


[title]



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