License agreements - under Dutch law
License agreement - under contract law in the Netherlands
What is a license agreement under Dutch law?
At the Dutch Law Institute, we understand the importance of navigating the legal landscape to protect your business interests. When it comes to license agreements under Dutch law, it is crucial to have a solid understanding of the legal framework and the intricacies involved. In this article, we will delve into the various aspects of license agreements governed by Dutch law, providing you with insights and knowledge to make informed decisions. From the definition and subject of license agreements to their different forms and formal requirements, we will cover it all.
Under Dutch law, a license contract grants a party (licensee) the right to use the licensor's property, typically an intellectual property like a patent or trademark. There's no specific Dutch legislation for this, but general contract and IP laws apply.
Unlike some jurisdictions, Dutch legislation does not have specific laws solely dedicated to licensing. Instead, Dutch law incorporates the provisions of general contract law, primarily codified in the Dutch Civil Code, to govern license agreements.
It is important to note that license agreements under Dutch law often intersect with other legal domains, such as intellectual property law and competition law, including EU competition law. This intersection adds additional layers of complexity and considerations that must be taken into account when drafting and negotiating license agreements.
Subject of a license agreement
The subject matter of a license agreement can encompass various assets or rights. Typically, it involves the granting of rights to use, execute, reproduce, publish, modify, display, perform, transmit, distribute internally or externally, sell, or prepare:
- Intellectual property: This can include patents, plant breeders' rights, copyrights, or trademark rights.
- Know-how: It encompasses proprietary knowledge, expertise, orconfidential information that is not publicly available.
- Software: License agreements may cover the use and distribution of software, including proprietary or open-source solutions.
- Domain names: License agreements can govern the use and management of domain names, enabling licensees to utilize specific domains.
Different forms of license agreements
Under Dutch law, license agreements can take various forms, providing flexibility and options to both licensors and licensees. Here are some common forms of license agreements:
- Exclusive, Sole, or Non-Exclusive - License agreements can be exclusive, sole, or non-exclusive in nature. An exclusive license grants the licensee all usage rights pertaining to the subject matter, while a sole license grants exclusivity to some extent, prohibiting the licensor from granting licenses to other parties. In contrast, a non-exclusive license allows the licensor to grant rights to multiple licensees simultaneously.
- Fixed-Period or Perpetual - License agreements can have a fixed duration, meaning they are valid for a specific period, or they can be perpetual, continuing indefinitely until terminated. It is common for agreements to include notice periods, providing both parties with the ability to terminate the agreement with prior notification.
- Existing or Pending Patents - License agreements may pertain to existing patents, where the licensee gains rights to utilize patented technology, or they can be tied to pending patents, allowing licensees to gain rights once the patent is granted. It is crucial to define the scope and conditions for pending patents in the license agreement to ensure clarity and avoid potential disputes.
License obligations and principles under Dutch law
When entering into a license agreement under Dutch law, certain obligations and principles apply, emphasizing reasonableness and good faith. The Dutch legal system places a strong emphasis on these principles, which permeate all contractual arrangements. Courts in the Netherlands have the power to set aside or invalidate contractual provisions that contradict the principle of reasonableness and good faith.
This requirement underscores the importance of negotiating and drafting license agreements with fairness and transparency in mind. Parties should ensure that the terms and conditions of the agreement align with these principles to maintain the validity and enforceability of the contract.
Formal requirements of license agreements under Dutch law
Unlike some jurisdictions, Dutch law does not impose specific formal requirements for license agreements. This means that these agreements can be concluded orally or through an exchange of documents. However, it is worth noting that certain licenses for intellectual property rights may only be invoked against third parties when properly registered. Therefore, it is advisable to consult a Dutch lawyer before entering into a license agreement governed by Dutch law to ensure compliance with the relevant formalities.
7 key considerations for license agreements under Dutch law
When preparing to enter into a license agreement governed by Dutch law, it is crucial to consider various factors to protect your interests and maintain a successful partnership. Here are some key considerations:
1. The scope of the license agreement under Dutch law
When entering into a licensing agreement, it is important to consider the temporal and territorial scope of the licensing arrangement. A licensing agreement may be for a fixed period or may be perpetual. In either case it may be advisable to include a notice period. The territorial scope of the licencing agreement should also be clearly and unambiguously defined in the agreement.
2. Invalidity or expiration of the license under Dutch law
Clearly define the scope of the license agreement, both temporally and territorially. Specify whether the agreement is for a fixed period or perpetual and include any relevant notice periods. Additionally, unambiguously outline the territorial scope to avoid potential disputes or confusion.
3. Assignment and sub-licensing under Dutch law
Decide whether to limit or prohibit the licensee's ability to assign or sub-license the rights granted under the agreement. Such clauses provide certainty regarding the ownership and distribution of intellectual property or other rights.
4. Confidentiality, know-how and goodwill
Consider including provisions that protect against the disclosure of confidential information, know-how, or goodwill. Breaches of these obligations can potentially give rise to claims under Dutch tort law and/or Dutch competition law.
5. New developments, during the currency of the license under Dutch law
Specify whether new developments related to the licensed intellectual property will be covered by the license agreement. In certain cases, the licensee may further develop the intellectual property, and the licensor may wish to benefit from those developments. In such instances, a non-exclusive license allowing the licensor to benefit from new developments could be considered.
6. Termination of a license agreement under Dutch law
Given the often long-term nature of license agreements, including provisions for termination under specific conditions can be prudent. For example, it may be advisable to include termination clauses in the event of licensee insolvency or the expiration or invalidation of an intellectual property right.
7. Dispute resolution under Dutch law - arbitration or jurisdiction of the Dutch courts
Consider including clauses for dispute resolution, such as arbitration or alternative methods, within the license agreement. Depending on the circumstances, arbitration or litigation in Dutch courts may be the preferred approach. Consulting with a lawyer can provide insights into the advantages and disadvantages of different methods for resolving disputes.
