How To Handle Dispute Resolution In A License Agreement?

Tuesday, September 26th 2023. | Agreement Templates
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How to Handle Dispute Resolution in a License Agreement?


When entering into a license agreement, it is important to consider how to handle dispute resolution. Disputes can arise for various reasons, such as non-payment of royalties, breach of contract, or disagreement over intellectual property rights. In order to effectively resolve these disputes, it is essential to have a clear and comprehensive dispute resolution clause in the license agreement. This article will provide some tips on how to handle dispute resolution in a license agreement.

1. Define the Dispute Resolution Process

The first step in handling dispute resolution in a license agreement is to clearly define the process that will be followed. This should include the steps to be taken, such as negotiation, mediation, or arbitration. It is important to specify whether the process will be binding or non-binding, and whether it will be conducted in a specific jurisdiction or through an international arbitration center.

2. Specify the Governing Law

In order to avoid ambiguity and confusion, it is important to specify the governing law that will be applied in the event of a dispute. This will help determine the rights and obligations of the parties involved, as well as the remedies available. The choice of governing law should be based on the jurisdiction that has the closest connection to the agreement.

3. Include a Mediation Clause

Mediation can be an effective way to resolve disputes in a license agreement. Including a mediation clause in the agreement will require the parties to engage in a mediation process before proceeding to arbitration or litigation. Mediation is a voluntary and confidential process in which a neutral third party facilitates communication and helps the parties reach a mutually acceptable solution.

4. Consider Arbitration

Arbitration is a popular method of dispute resolution in license agreements, particularly for international agreements. It offers a more private and flexible process compared to litigation. When including an arbitration clause, it is important to specify the rules that will govern the arbitration, such as those of a specific arbitration institution.

5. Define the Remedies

The license agreement should clearly define the remedies that will be available in the event of a dispute. This may include monetary compensation, injunctive relief, or termination of the agreement. By specifying the remedies, both parties will have a clear understanding of the potential consequences of a breach of the agreement.

6. Include a Confidentiality Clause

Confidentiality is often a concern in license agreements, especially when it comes to intellectual property rights. Including a confidentiality clause in the agreement will help protect sensitive information and trade secrets. The clause should outline the obligations of both parties to maintain the confidentiality of the information disclosed during the dispute resolution process.

7. Consider Expert Determination

In some cases, it may be beneficial to include an expert determination clause in the license agreement. This allows for the appointment of an independent expert to resolve specific technical or scientific disputes. The expert’s decision is binding on the parties and can provide a quick and cost-effective resolution.

8. Review and Update the Clause

Dispute resolution clauses should be periodically reviewed and updated to ensure they remain relevant and effective. As the business and legal landscape evolves, it may be necessary to revise the clause to incorporate new developments or address potential issues that were not originally anticipated.

9. Seek Legal Advice

When drafting a license agreement and its dispute resolution clause, it is advisable to seek legal advice. An experienced attorney can provide guidance on the best approach to handling disputes and help ensure that the agreement complies with applicable laws and regulations.

10. Conclusion

Handling dispute resolution in a license agreement requires careful consideration and planning. By including a clear and comprehensive dispute resolution clause, specifying the governing law, and considering alternative dispute resolution methods, parties can effectively resolve disputes and protect their rights. Seeking legal advice is always recommended to ensure the agreement is properly drafted and enforceable.

Sample “How to handle dispute resolution in a license agreement?”

1. The Importance of a Dispute Resolution Clause in a License Agreement

2. Key Elements to Include in a Dispute Resolution Clause

3. Mediation vs. Arbitration: Choosing the Right Method for Dispute Resolution

4. International License Agreements: Considerations for Dispute Resolution

5. Best Practices for Drafting a Dispute Resolution Clause in a License Agreement

Frequently Asked Questions (FAQ) about “How to handle dispute resolution in a license agreement?”

1. What is the purpose of a dispute resolution clause in a license agreement?

2. Can parties choose any governing law for their dispute resolution clause?

3. What are the advantages of including a mediation clause in a license agreement?

4. How does arbitration differ from litigation in the context of license agreements?

5. Is it possible to change the dispute resolution method specified in the agreement?


dispute resolution, license agreement, negotiation, mediation, arbitration, governing law, remedies, confidentiality, expert determination, legal advice

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