When To Use An IP Licence Agreement (2025 Updated)

Contents

What is an IP Licence?

Intellectual property, or “IP”, refers to the various rights available under the law for intangible property – this can include brand names, logos, original content, software code, and even emerging digital assets that are increasingly significant in 2025. In nearly every business, IP is among the most valuable assets and should be robustly protected. For additional insights on safeguarding your intellectual property, consider our Trade Mark Initial Consultation service.

An IP Licence Agreement is a legally binding contract that allows you to monetise your IP while retaining ownership – it permits third parties to use your IP on terms and conditions you set. A comprehensive IP Licence Agreement should clearly outline key terms such as payment structures, licence scope, termination rights, and liability protections. For further insight into the fundamentals of enforceable contracts, see our article on what makes a contract legally binding.

Why Do I Need It?

Whenever you allow someone else to use your IP, you need an IP Licence Agreement to protect your interests. Likewise, if you wish to use another party’s IP for your business, obtaining a licence from the owner ensures that your usage is authorised and clearly defined. This is particularly important in 2025 as evolving digital trends and updated legislation mean that clear licensing terms are essential to avoid disputes and ensure proper remuneration.

How Do I Do It?

You should have your IP Licence Agreement drafted or reviewed by a qualified lawyer to ensure it complies with the latest legal standards. Often, an IP Licence forms part of a broader contract you have with a customer—such as a Service Agreement or Development Agreement—so it’s important that all related documents are consistent and comprehensive.

As technology advances, your IP may encompass a wider range of digital and online assets. Regularly reviewing and updating your licensing terms is crucial to reflect current legislation and best practices. This diligence helps protect your IP from emerging risks and ensures that your revenue streams remain secure in the fast-changing marketplace of 2025.

IP Licence Agreement Example

Morgan has developed innovative software code that can be integrated with various apps to prompt real-time notifications. Three different app companies are interested in using her software, meaning that she needs a non-exclusive licence drafted.

Morgan engages a lawyer to draft an IP Licence Agreement that enables all three companies to use her code on a non-exclusive basis. This arrangement ensures she receives payment for the usage while retaining full ownership and the right to licence her IP to any future app companies.

If you are considering expanding your IP usage beyond Australia, it’s worth exploring our International Trade Mark Consultation Package. This service offers tailored advice for structuring cross-border licensing agreements that comply with the updated regulations of 2025.

What’s In An IP Licence?

An IP Licence Agreement should cover the following parameters:

Territory – Where does the agreement apply? E.g. worldwide, Australia-wide, or limited to a particular state?
Exclusivity – Is the licence exclusive to one party, or is it non-exclusive so you can licence the same IP to multiple entities?
Term – How long will the licence last? Options might include fixed terms such as 1 year, 3 years, or even a perpetual licence.
Revocability – Can the licence be revoked, and if so, under what circumstances and with what notice?
Transferability / Sub-Licences – Can the licence be transferred or sub-licenced to another person or company?
Payments / Royalties – How will payments be structured? This might entail annual fees, percentages of sales, or other arrangements.
Purpose – Are there any restrictions on the use of the IP to ensure that it aligns with your business strategy and brand values?

Need Help With An IP Licence?

Drafting an IP Licence Agreement can be complex and sometimes daunting, with numerous factors to consider and precise wording required to protect your interests. Investing in expert legal assistance is a one-off cost that can save you from future disputes, minimise liability, and ensure you secure a fair deal. For further guidance, you can also refer to our comprehensive Intellectual Property Guide and our Contract Review service.

At Sprintlaw, our experienced team of lawyers is ready to assist you with drafting or reviewing your IP Licence Agreement. Get in touch with one of our consultants for a no-obligation chat on how we can help you navigate the complexities of IP licensing in 2025. You can also explore our IP Licence Agreement service page for more details and to learn how our solutions can support your business’s evolving legal needs.

Minna Boyle

Minna is the Head of People & Culture at Sprintlaw. After completing a law degree and working in a top-tier firm, Minna moved to NewLaw and now manages the people operations across Sprintlaw.