Drafting a License Agreement with the Civil Code's Machinery
A license agreement — over copyright, a trademark or technology — rests on the machinery of the Civil Code, and it is that machinery which decides whether the drafted document will stand: the freedom of contract for shaping an atypical licence (Article 319); the fairness gap-filler for unwritten terms (Article 325); the surprise-clause filter for standard terms (Article 344); and the enforceable penalty architecture (Article 418). This page explains these mechanisms as a licence document uses them.
Freedom of Contract — Article 319
Subjects of private law may, within the limits of the law, freely conclude contracts and determine their content; they may conclude contracts not provided by law provided these do not contradict it — hence the possibility of non-standard licence structures. There are boundaries: where one party holds a dominant position on the market, it bears an obligation to contract and may not groundlessly offer the counterparty unequal terms; and persons acquiring or using property or services for non-entrepreneurial purposes or vital needs may not be unreasonably refused a contract where the other party acts within its entrepreneurial activity. For the licensor this means: freedom is broad, but market power has a limit on its use.
The Fairness Gap-Filler — Article 325
Where the conditions of performance must be determined by one party to the contract or by a third person, in case of doubt it is presumed that the determination is to be made on the basis of fairness. And where a party does not consider the terms fair, or their determination is delayed, the decision is taken by the court. In licences this norm works often: a royalty formula depending on one party's data, or technical specifications to be set by a third person, are read in case of doubt against the standard of fairness. The determiner's authority must therefore be written into the contract precisely.
The Surprise-Clause Filter — Article 344
Those clauses of the standard terms of a contract which are so unusual in form that the other party could not have reckoned with them do not become a constituent part of the contract. In licensing practice this filter addresses templates: an unusual clause buried in pre-formulated terms — say, an unusual territorial restriction or a unilateral right of amendment — does not enter the contract where the other party could not have expected it. When using a standard form, unusual conditions must therefore be set out with particular prominence.