Design licence agreement

A design licence agreement is the contract by which the owner of a registered design authorises a third party, the licensee, to exploit the protected appearance. The authorisation may cover all or part of the products, territories and duration of protection. In return, the licensee pays royalties, while the owner retains title. Articles L. 513-2 et seq. of the French Intellectual Property Code govern this contract, together with general contract law.

Forms of licence

Under an exclusive licence, the owner undertakes not to grant other licences in the same territory and, unless otherwise agreed, also refrains from exploiting the design itself. A non-exclusive licence allows the owner to grant several parallel licences. The licence may be limited to certain products, distribution channels or countries; for an EU design it may even cover only part of the Union. The licence must be recorded in the register to be enforceable against third parties, and recordal also allows the licensee to join an infringement action.

Essential clauses

The contract identifies the titles concerned, the scope of the licence and its duration. It sets the royalties, their basis, guaranteed minimums and sales auditing. It organises quality control of the products, essential to preserve the image of the creation, and settles the fate of adaptations made by the licensee.

It also frames infringement actions. The exclusive licensee may sue if the owner, after formal notice, fails to act. The non-exclusive licensee may intervene to obtain compensation for its own loss. Finally, the contract provides for termination and the selling-off of stocks.

Key points

In practice, the creation is often also protected by copyright. The licence must then also cover those rights, in compliance with the applicable formalities; otherwise a third party could challenge the licensee’s exploitation on that basis. This contract is common in fashion, design, furniture and merchandising. The firm drafts such agreements and handles the resulting disputes, as presented on its contracts page.