Know-how License Agreements

A know-how license agreement concerns right to know-how. Protection of know-how differs from other licensable rights, as it cannot be patented and does not enjoy statutory protection.

A know-how license agreement is often concluded to supplement a patent license agreement. For instance, utilization of patented technology might be based on knowledge and skills which, per se, are not patentable, but must be transferred in order to enable full utilization of the technology. A workable solution in such situations may be to use a know-how license agreement.

The most important objective of a know-how license agreement is to define the know-how and its transfer, for instance through documentation, training or technical support.

The agreement should also carefully define, whether the licensee is granted an exclusive or a non-exclusive right, as well as the geographical territory of the license. Compensation must also be defined. If the know-how license agreement applies within the European Union, competition law regulations should be taken into account. See further in the Chapter Competition Law [Competition Law].

Know-how license agreements are distinct in that they usually place an obligation on the licensee to utilize the know-how. It may be agreed that the licensee’s right of utilization expires or becomes more limited, if the licensee fails to utilize the right within a specified period of time.

As in other types of license agreements, it is possible to further develop the know-how, and the licensee may be granted an option to obtain updates.

It is particularly important for know-how license agreements to include provisions regarding confidentiality, as know-how is not protected by legislation or by the authorities. Confidentiality issues should be agreed upon already before commencing contract negotiations. The know-how license agreement itself should also contain a confidentiality clause.