A license agreement grants the licensee the right to exploit the licensor's intellectual property in exchange for remuneration. In our practice, we advise Dutch clients as both licensors (international rollout) and licensees (access to technology). A well-structured international license governs scope, royalties, exclusivity, quality control, and termination — under Technology Regulation 316/2014 (TTBER).
What is the legal issue?
License agreements govern scope, royalties, exclusivity, quality control, and termination. Internationally, rules regarding choice of law, tax treatment, and enforcement vary. Licenses that are too broad reduce value; licenses that are too narrow lead to underperformance by the licensee. Competition rules limit exclusivity and territorial protection within the EU.
What does the law say?
Within the EU, the Technology Transfer Block Exemption Regulation (Regulation (EU) 316/2014, valid until 30 April 2026 with successor in preparation) governs patent and know-how licensing. For software, EU Directive 2009/24/EC applies. International treaties (Bernese Convention, Paris Convention, TRIPS 1994) provide minimum standards. Royalty payments are covered by tax treaties and withholding tax by the Withholding Tax Act 2021.
For trademarks and designs, registration requirements apply under Regulation 2017/1001 (EU Trademark) and Regulation 6/2002 (Community Design). Specific rules apply to FRAND for standards.
What risks do companies face?
Insufficient quality control leads to reputational damage. Excessively broad sublicensing rights undermine exclusivity. An unclear royalty basis leads to underpayment. An incorrect tax structure leads to double taxation or withholding tax. Competition law violations lead to nullity and fines under Article 101 TFEU. Upon termination, former licensees may compete with your own brand or technology.
Practical example from our practice
We represented a Dutch brand manufacturer that granted broad sublicenses to an Indian licensee without quality requirements. The licensee subleased the brand to parties that supplied products of inferior quality. The brand name was damaged throughout South Asia. When renegotiating contracts, we incorporated the following: a prohibition on sublicensing, brand guidelines with measurable standards, pre-approval of marketing materials, an annual audit, and automatic termination upon quality violation. Rectification within 18 months.
What can you do?
Clearly define the scope (rights, territory, use, duration). Regulate royalties (fixed, percentage, minimum) with an audit. Incorporate quality control, brand guidelines, and samples. Limit or prohibit sublicensing. Align with TTBER (Regulation 316/2014) and Article 101 TFEU. Provide for termination with transfer and a cessation of use. See also our article on cross-border software licensing.