Q&As

In a written intellectual property licence that satisfies the English law requirements for creation of a contract and that is not in conflict with competition laws, can royalties be contractually agreed to be paid in perpetuity?

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Published on LexisPSL on 07/01/2019

The following IP Q&A provides comprehensive and up to date legal information covering:

  • In a written intellectual property licence that satisfies the English law requirements for creation of a contract and that is not in conflict with competition laws, can royalties be contractually agreed to be paid in perpetuity?

It has been assumed that this Q&A refers to validly created licences and individual IP right licence requirements (ie whether must be in writing and signed etc) have not been covered. As such in conducting our research, we have focused on IP licence agreements in which royalties are payable.

There are many different types of UK IP licence. Such licences are governed by IP right specific laws such as the Copyright, Designs and Patents Act 1988, the Patents Act 1977 or the Trade Marks Act 1994. Technology transfer licensing is subject to UK and EU competition laws. Licences are also governed by common law. A perpetual licence may be granted (and the payment of royalties tied to the term of the licence). However, the period of the licence cannot extend the duration of the underlying IP right (for example for copyright this is the life of the author plus 70 years).

We refer you to the UK section of the Practice Note: Getting the Deal Through: Licensing 2018 which addresses the following questions, among others:

‘9 What is the effect of the invalidity or expiry of registration of an intellectual property right on a related licence agreement in your jurisdiction? If the licence remains in effect, can royalties continue to be levied? If the licence does not remain in effect, can the licensee freely compete?

Typically, it will

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