What goes into a technology licence: a practical checklist

19 September 2026

A licence lets someone else use your intellectual property on agreed terms while you keep ownership. Getting the commercial structure right before lawyers draft the agreement saves time and avoids disputes later.

1. What exactly is licensed?

List the patents, applications, know-how, software or materials included. Be clear whether improvements made later by either party are included.

2. Field of use

A licence can be limited to particular applications or industries. Field limits let you license the same technology to different partners without them competing.

3. Territory

Which countries does the licence cover? Align territory with where the licensee can genuinely sell, and with where you hold rights.

4. Exclusivity

Exclusive licences command higher value but put all your eggs in one basket. If you grant exclusivity, consider performance obligations such as minimum royalties or development milestones.

5. Financial terms

• Upfront or signature fees
• Milestone payments linked to development or regulatory events
• Running royalties on sales, and how “net sales” is defined
• Minimum annual payments
• Sharing of sub-licensing income

6. Obligations and reporting

Who maintains and defends the patents? What reports must the licensee provide, how often, and can you audit them?

7. Term and termination

How long does the licence last, and in what circumstances can either party end it? What happens to stock, sub-licences and know-how on termination?

Before you sign

Prepare a term sheet covering these points and agree it in principle before drafting begins. A clear term sheet makes the legal drafting faster and cheaper – and reduces the risk of misunderstandings later.