On the other hand, if your agreement includes the term „irrevocable,“ it could be much more difficult to terminate it. The possibility of termination depends on the entire contract and its interpretation. Both of these scenarios show how important it is to make sure your initial agreement contains the right language for your business. In the United States, the issue of terminating a perpetual license agreement has not been clarified. The law is a bit grey in this area. However, if you have included a specific language in your license agreement, termination may be a simpler matter. For example, if your agreement states that it is „revocable at will“, it is very likely that you can terminate the agreement at any time for any reason. Patents are a significant capital investment for a start-up, but also an office building. However, no start-up is the direct owner of its office building. Even if they owned the building, they would take out a mortgage on the building to free up capital. Exclusive licenses are the same as a lease: the startup has full control over the assets, but does not have to spend capital to build or maintain the asset. There are also two different types of license terms.
A licensor grants an exclusive license if it wants another company to bring a technology to market. Exclusivity encourages the licensee to invest in the development of the market potential of the technology. If your license agreement is silent on restrictions, revocability, and termination (meaning it doesn`t include language on these topics), your ability to terminate will likely depend on the duration of the agreement. Many courts have concluded that perpetual non-exclusive agreements that remain silent on revocability are revocable at will. Conversely, with respect to contracts of non-exclusive duration (which set a fixed time limit for the licensee`s rights) that are silent on revocability, many courts have concluded that they cannot be terminated during the term. But do these agreements really run to the end times, or are there circumstances in which you can terminate a perpetual license agreement? The answer usually revolves around your answers to two other questions: For a startup, an exclusive license for a patent is actually more valuable than „owning“ a patent. A perpetual license agreement, as the word „perpetual“ implies, grants the licensee lifetime rights to the product.4 min read If done right, the licensee`s startup can benefit from professional patent management systems that it could not otherwise afford. In addition, the licensor is incentivized to invest in patents by paying the accelerated costs, the additional costs of filing an appeal with the patent office, assistance in defending the patent before the review or other costs that the start-up can avoid.  Startups themselves can use exclusive licenses to grant certain rights to complementary suppliers, vendors, competitors or companies. An exclusive licence may be narrowly targeted, for example the .B granting of exclusive rights in a particular industry or region. These are usually the most complex types of licensing agreements, as everything involves obtaining and maintaining a patent.
 Not all exclusive licenses provide for sub-licensing or cross-licensing options. Sometimes these provisions may be limited to a start-up, while at other times they may not be. It is important to know what limitations – if any – are associated with the license agreement. An exclusive license grants the licensee a single authorization to exploit the intellectual property in question. No other company, including the licensor (Licensor), may use the intellectual property covered by the License unless specific exceptions are included in the Agreement. According to BrewLong`s attorney, Ashely Brewer, „Licensing agreements are like leases. Much depends on the ownership and relationship of the parties. Exclusive licences are those that create a clear relationship between the licensor and the licensee. In these types of license agreements, the licensor agrees that the licensee is the only one who can use the intellectual property. These usually cost more for the licensee.
An additional difference between a perpetual license agreement and a subscription-based license is that with the latter, you don`t own the software, but you rent it. This isn`t a big deal for most people, except for those who prefer to pay a flat rate in advance rather than a monthly or annual fee. A much less common form of license is a single license. This usually means that the license is exclusive, except that the licensor also reserves the full right to exploit the intellectual property itself. Licensor is not permitted to grant any further sublicenses. Although this is the generally understood meaning, if this is the intention of the parties, it would be preferable for them to explicitly state in the agreement the scope of the rights of each licensor and the licensee. Experienced investors recognize the benefits of exclusive licenses, and many prefer exclusive licenses to the cost, hassle, and uncertainty of a startup managing its own patent portfolio. A non-exclusive license grants the licensee the right to use the intellectual property, but means that the licensor is free to exploit the same intellectual property and to allow a number of other licensees to exploit the same intellectual property as well. A perpetual license agreement, similar to what the word „perpetual“ implies, grants the licensee lifetime rights to the product, provided they do not violate the terms of the agreement. Perpetual license agreements are often used when purchasing software. The photo editing program you recently purchased may have a perpetual license agreement as long as you do not use the software outside the scope of the agreement (allow a third party to use it, use it for commercial purposes, make copies of it, etc.) . .