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License Agreement Drafting

What happens if the license agreement is not in writing?

According to Georgian law, a licensing agreement for intellectual property must be in writing to be valid. A verbal agreement is null and void, meaning you cannot enforce your rights or demand royalties in court. Drafting a proper written contract is the only way to legally transfer usage rights.

Can I restrict the licensee from selling outside Georgia?

Yes, you can include territorial restrictions in the license agreement. You can specify that the licensee has the right to use or sell the product only within the borders of Georgia. Any sales outside this territory would constitute a breach of contract and copyright infringement.

Is sub-licensing allowed automatically?

No, sub-licensing rights are not granted automatically. The licensee can only transfer rights to a third party if the original agreement explicitly permits it. If you want to prevent your partner from reselling rights, the contract must either remain silent on this or expressly forbid it.

How do audits work in licensing agreements?

An audit clause allows the licensor to appoint an independent accountant to inspect the licensee's books and sales records. This ensures that the royalties paid match the actual sales figures. It is a crucial tool for preventing underreporting of revenue in royalty-based deals.

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Drafting and Legal Analysis of Licensing Agreements

A licensing agreement is the main instrument for commercializing intellectual property. A well-drafted contract not only protects your rights but also increases asset value. In Georgia, parties often use templates downloaded from the internet that do not account for local legislation or transaction specifics. Consequently, disputes arise regarding the scope of rights, territory, or remuneration. A professionally drafted contract must regulate all critical details: exclusivity, terms, territory, sub-licensing rights, and termination conditions.

Legal.ge offers services for drafting licensing agreements. Our lawyers create individual contracts tailored to your business needs, whether for software licensing, franchising, or music use. We ensure the document is legally sound and enforceable in Georgian courts.

What Does License Agreement Drafting Service Cover?

Our service involves detailed processing of every contract clause:

  • Defining Scope of Rights: Precise formulation of what rights are transferred to the licensee (e.g., print edition only or electronic as well).
  • Territorial and Time Restrictions: Is the license valid only in Georgia or globally? For 1 year or perpetually?
  • Financial Terms: Royalty calculation method, advance payment, minimum guarantee, and payment schedule.
  • Warranties and Indemnification: Guarantee that the work is original and does not infringe others' rights.
  • Quality Control: Mechanisms for the licensor to control the quality of their brand or work usage.
  • Audit Rights: Right to inspect the licensee's financial records to calculate correct royalties.

Common Situations and Risks

A common mistake is transferring "all rights" without specification. Under the law, if a right is not explicitly stated in the contract, it is not considered transferred. For example, granting book publishing rights does not imply audiobook rights. A lawyer ensures wording is precise and exhaustive.

Another risk is difficulty in termination. If a licensee fails to pay or damages the product, the licensor needs a mechanism for quick contract termination. A poorly drafted contract can restrict you from working with other partners for years.

Georgian Legislation and Legal Framework

Agreements are regulated by the Civil Code of Georgia and the Law on Copyright and Related Rights. The law requires a written form. There are also mandatory norms that cannot be altered by contract (e.g., the author's moral rights).

Process of Receiving Services

The client provides information on the transaction essence. The lawyer prepares an initial draft. Then, this draft is reviewed with the client and adjusted. If necessary, the lawyer participates in negotiations with the other party to agree on terms. The final stage is preparing the version ready for signature. We also offer audits of existing contracts.

A good contract is the best defense against litigation. Draft it with professionals on Legal.ge.

Why Choose a Specialist on Legal.ge?

Our platform hosts lawyers specializing in contract and IP law. They know how to balance parties' interests and create a document that works in a real business environment.

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