License agreements - under Dutch law

Licensing - under Netherlands contract law

What is a license agreement under Dutch law?

Under Dutch law a license agreement is an agreement whereby one party (the licensor) grants another party (the licensee) a specified right to use a property right. In many cases the right in question will be a right to intellectual property, for example a patent, a trade mark or a domain name. In the Netherlands license agreements can take many forms. For example, a license agreement may be (i) exclusive or non-exclusive, (ii) for a fixed-period or perpetual or (iii) may concern an existing or a pending patent.

Example clause regarding exclusivity of license

Exclusivity - Licensor agrees that it shall not grant any other license, nor a license to develop, make, have made, use, sell, offer to sell, lease and import Licensed Products in the field in the Territory or to perform Licensed Processes in the field in the Territory during the Term, unless sooner terminated as provided in this Agreement.

License Agreements under the laws of the Netherlands

In the Netherlands there is no specific legislation regulating license agreements. This means that license agreements under Dutch law are subject to the general provisions of Dutch contract law. License agreements are likely to touch upon other areas of law such as intellectual property law and competition law (including EU competition law).

An important feature of Dutch law is the overriding obligations of reasonableness and good faith that apply to all contractual arrangements. The Court may set-aside or invalidate provisions that it considers to be contrary to the principle of reasonableness and good faith.

There are no formal requirements for license agreements in the Netherlands. This means that a license agreement can be concluded orally, or for example, through an exchange of documents. However, some licenses for intellectual property can only be invoked against third parties when they have been correctly registered.

It is advisable to consult a Dutch lawyer before entering into a license agreement that will subject to Dutch law to ensure that the drafting and execution of the agreement is consistent with requirements of Dutch law.

Six things to consider when entering into a license agreement under Dutch law

If you enter into a license agreement ruled by Dutch law, you should at least consider the following six things:

1. The Scope of the license agreement - When entering into a licensing agreement 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. The effects of invalidity or expiration of the license - It is also important to consider what will happen if the registration of the intellectual property right in question is held to be invalid or expires. If the license agreement does not contain a clause regulating this matter the license agreement will expire simultaneously with the expiry or invalidation of the registration (to the extent that the license agreement concerns that right).
3. Assignment and sub-licensing - The licensing agreement may also include clauses limiting or prohibiting assignment or sub-licensing by the licensee. Such clauses provide certainty as to whom will have rights to the intellectual or other rights in question.
4. Confidentiality, know-how and goodwill - Many licensing agreements also contain provisions protecting against disclosure of know-how or goodwill and/or confidentiality clauses. A breach of these obligations may also give rise to a claim under tort law and/or competition law.
5. Termination of the license under Dutch law - Given the (often) long-term nature of licensing agreements, including provisions allowing for termination under certain conditions may be advisable. For example, you may wish to provide that the agreement can be terminated where the licensee becomes insolvent or where the registration of an intellectual property right expires or is invalidated.
6. Dispute resolution under Dutch law - You may want to consider including an arbitration or alternative dispute resolution clause in your licensing agreement. A lawyer can advise you on the potential advantages or disadvantages of different methods of dispute resolution for the agreement in question.