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The ACID Licence/Royalty agreement is designed to foster and develop best practice in licensing/royalty relationships. Protecting the interests of both parties, without compromising either party and maximising commercial opportunities, the ACID Licence/Royalty agreement includes a standard set of basic conditions to which additional specific clauses relevant to a particular set of circumstances can be added and included if required. The Agreement is intended to be a reasonable and professional foundation on which two parties can work together in a licensing/royalty relationship.
ACID considers that it is particularly important for a designer to have their name associated with their designs and urges designers to include Clause 6 (Use of Licensor’s Name) of the ACID Licence/Royalty Agreement in their agreements with manufacturers.
Basic Elements:
1) Easy to understand, avoids legal jargon
2) Legally enforceable
3) Supports Design protection and exploitation
4) Contains clauses to cover negative situations
5) Demonstrates a fair balance between designers and manufacturers
6) Incorporates provisions drafted by Judges in various Court cases involving licensing arrangements to ensure that parties using the agreement will have very little left to negotiate before the agreement can be signed.
Points to consider for possible negotiation and inclusion
In a commission situation it may be worth adding a clause making it clear that the commissioner does not own any rights in the designs concerned. It may be necessary for the Licensee to assign any rights it owns in the designs to the Licensor. Legal advice should always be sought to determine who owns any rights.
When considering the payment of royalties, the designer might want to ask for an ‘up front’ payment from the licensee manufacturer which can be offset against future royalty payments rather than royalty payments in respect of past sales only. Alternatively, the designer might want to simply ask for a one-off lump sum payment for granting the licence.
ACID Glossary of Intellectual Property Terms
| Term | Definition
|
| Breach | Where a party to an agreement disregards or acts contrary to a term of that agreement. |
| Consideration | The value given by each party to an agreement to make that agreement binding. For example, a Licensor will grant a Licence in Consideration for remuneration and the Licensee will pay the remuneration in Consideration for the Licence. |
| Copyright | Very broadly speaking, Copyright arises automatically in various kinds of works, including literary, dramatic, musical and artistic works. There is no need to register Copyright under UK law but, in order for it to arise, the work must be original (i.e. not copied) and “recorded” (i.e. fixed in a material form, such as in writing, as a drawing, audio-recording etc). The owner of the Copyright in a work has the exclusive right to do certain things with that work, and has the right to pursue any infringement. |
| Exclusive Licence | A Licence which restricts the Licensor from granting a Licence to anyone else and from exploiting those rights himself/herself. The benefit of an Exclusive Licence is that the Royalty which the Licensor receives in return is likely to be greater than any Royalty he/she would receive in return for a Non-Exclusive Licence. |
| Rights (IPR) | Collective term for the rights arising under the laws relating to Copyright, Unregistered Design Rights, Registered Design Rights, Patents, Trade Marks, Passing Off, Utility Models and the Law of Confidence. |
| Licence | Permission granted to someone to carry out certain acts in relation to the Licensor‘s IPR for a period of time and often in limited territories. If/when it comes to an end, the rights revert to the Licensor. |
| Licensee | The party obtaining permission to use certain rights by way of a Licence. |
| Licensor | The party granting a Licence. |
| Non-Exclusive Licence | A Licence which enables the Licensor to exploit the same rights as he/she has allowed the Licensee to exploit, as well as allowing third parties to exploit them. |
| Registered Community Design Right | A design will be registrable with the Community design registry (known as OHIM) if it is new and if it gives a different overall impression to anything going before it. Also like the Registered UK Design Right, it will last for up to 25 years if renewed. |
| Registered UK Design Right | A design will be registerable with the UK Patent Office if it is new and if it gives a different overall impression to anything going before it. Various aspects of a design may be protected by Registered Design Right, e.g. its shape, contours, colours, texture, ornamentation and packaging. This lasts initially for 5 years but can be renewed up to a total of 25 years. |
| Royalty | A Licensor will often receive a Royalty in return for licensing his/her IPR. This can be a percentage based on, e.g., profits or a fixed fee. |
| Sole Licence | A Licence under which both the Licensor and the Licensee can exploit the same rights, but the Licensor may not allow third parties to do so as well. |
| Unregistered Community Design Right | This arises automatically for any design which is new and which gives a different overall impression to anything going before it. It will last for 3 years. |
| Unregistered UK Design Right | This right arises automatically when an original (i.e. not copied) design is either recorded in a design document or an article is made to that design. In addition, the design must not be commonplace in the design field in question. Unregistered Design Right arises automatically in any aspect of the shape or configuration of the whole or part of an article. Certain designs are excluded. The right will usually subsist for 10 years from the end of the year of first marketing. |
This agreement is a reusable legal document template which you can alter to include names, dates, addresses etc. There may be some clauses which need to be amended or deleted as they do not apply to your circumstances. This is because the document is designed as a general document to cover most commercial situations and therefore certain wording may not be appropriate, or suitable, for all situations.
As this agreement has not been drafted specifically for your circumstances, it is strongly advised, once you have made the appropriate changes to meet your business requirements, that you check it with your solicitor or with an ACID Accredited lawyer before using it, in order to ensure that the document suits your particular circumstances. No liability is accepted by ACID or any ACID Accredited Law Firm.