Lawsikho Blog

In this article, we will walk through how to draft a robust licensing agreement that covers both software and trademark rights. I will show you what clauses to include, how to structure them, and what pitfalls to avoid. We will also look at examples and provide sample clauses you can adapt to your own context.

Introduction

I once had a friend who used to lend me her Harry Potter books. I was around 12 at that time. She pushed me to read it, but I was not very sure because I had already seen the movies. 

Nevertheless, I got into it. And the more I read, the more I wanted. As soon as one book was over, I would run to the other side of the apartment to get the next one. 

So, after the third book was done, I quickly went over and asked for the next one. It was her mom who opened the door. 

I requested the next one. “No.”, she said. “It is past 9 pm.”

I was a little lost. I asked if I could come back tomorrow morning and take the rest of the four books at once.

Again, “No,” she said. “You can only take one book at a time.” 

I went back home dejected. 

Now, when I think about it, she was actually licensing her books to me. 

She owned the book, and she was letting me read it. There were also certain terms and conditions in place. 

The only thing missing? A licensing agreement. 

What is a licensing agreement? And how to draft one? Let us see. 

Understanding the licensing landscape

Now you know that if you have ever created, you hold something powerful: intellectual property. 

This could be a smart piece of software or a cool logo. You could be a solo developer building an app in your bedroom. You could even be a parent guiding your child’s tech project into the market. But it will not be just homework, it will be something more. 

So now what if you want to give it to another person/company for them to use? You need to license your product to them. And while doing that, you need to have a strong agreement in place. 

Intellectual property is an asset. You would never hand over the keys to your car without clarifying who is responsible for fuel, maintenance, and what happens if it is misused.

You need to see your IP through the same lens. Licensing your software and trademarks is no different. You are not just sharing your creation; you are legally controlling how others use it, how long they use it for, and on what terms.

What does your agreement have to be? 

Well, it has to be clear, enforceable, and tailored to your specific situation. 

What is your goal?

The goal is not just legal protection, it is peace of mind.

Before you begin drafting a licensing agreement, you must understand what you are licensing and the legal structure around it. There are two main components you are dealing with, software and trademarks, and each comes with its own set of rights and responsibilities.

What is a licence?

A licence is essentially permission. It allows someone else to use your intellectual property under defined conditions, without transferring ownership 

You, the licensor, remain the owner; the other party, the licensee, only gets to use it in the way you permit. Just like Aunty was letting me use Harry Potter only one by one. 

Licences can be:

• Exclusive – Only one licensee gets the rights; even you, as the licensor, step aside.
• Non-exclusive – You retain the right to license the IP to others, too.
• Sub-licensable – The licensee can further license the IP to others, if permitted.

Knowing which of these fits your needs is crucial, especially when you are dealing with commercialisation or joint ventures.

Licensing software vs licensing trademarks

Let us break this down.

Software licensing – 

Software licences usually revolve around:

• Who can access the code – source code or just compiled software?
• How can the software be used – internal use, resale, integration with other tools?
• Whether it can be modified, copied, or redistributed.

You may have heard of terms like EULA (End User Licence Agreement), SaaS Licence, or Open Source. These are different models, but the core idea remains: defining who uses the software and under what terms.

Trademark licensing –

Trademarks, on the other hand, represent your brand, your name, your logo, and your visual identity. When you license a trademark, you are allowing someone else to use your brand under strict conditions. This includes:

• Where it can be used (territory)
• On what products or services (field of use)
• For how long, and with what level of quality control

Without quality control, trademark licensing can backfire. A poor-quality product bearing your name could tarnish your brand. So, every trademark licence must be paired with brand usage guidelines and audit rights.

When do you need a combined licence?

Let us consider a real-world example. Say your child has developed an educational app, and you, as the parent, want to license it to a school. The software itself needs a software licence. But if the app includes a unique name and a catchy logo, those fall under trademark. In this case, your agreement must address both.

Failing to license the brand name separately could lead to confusion or disputes about brand misuse. Worse, it could lead to trademark dilution or even loss of your rights if it is used inconsistently.

Steps to take before drafting the agreement 

Step 1: Clearly identify what you own 

Make a list of everything you are licensing. Is it only the software? Are you also licensing a logo, name, or tagline? Is the software built entirely by you? Or does it use third-party code or open-source libraries?

You can catalogue each element of IP that you are intending to license. This can be the software, the design interface, the documentation, etc. You can even add any unique user flows or algorithms. 

Along with this, you should also identify any branding elements. What does this mean? This is related to the product name. So your brand can include the product name, a propeller logo, and the colour scheme of that logo. All of these elements can fall under trademark protection if used properly.

Also, it is necessary to identify any third-party content embedded within your software. 

• Are you using open-source libraries? 
• Paid plugins? 
• Fonts or graphical assets licensed from external providers? 

If any component of your codebase or visual design is derived from a third-party source, you need to ensure that its license permits you to commercially license it to others. Otherwise, you risk breaching someone else’s rights even as you try to protect your own.

Only once you are confident about what is yours, what you are entitled to license, and what needs to be excluded from the license, can you move forward.

Step 2: Establishing ownership and rights

Before entering into any licensing arrangement, you must ensure that the intellectual property you are offering is fully owned or otherwise controlled by you. 

If registration has been completed, for example, for a trademark or copyright, have those certificates ready. 

Talking about registration, do not forget registration. It gives you stronger protection. And it is actually always better to have your IP registered. 

For a trademark, consider filing for a trademark if the name/logo is central to your product.

While Indian copyright protection exists from the moment of creation, registration creates formal proof of ownership, which is helpful in enforcement.

Step 3: Understand the nature of the relationship

You need to be clear on this. Are you licensing to a company, an individual, a school, or an investor? Is it a short-term commercial use or a long-term integration? Will they need your help to operate the software (e.g., installation, tech support)?

This helps determine the level of rights you should give and the responsibilities you retain.

For example, if you are licensing your journaling app to an education platform, you need to understand whether they plan to offer it to their internal users only or whether they will be white-labelling it for third-party schools. 

Also, what about updation? Will they need you to maintain and update the software? Are you expected to provide technical support? What are their expectations around brand co-usage? Will they retain your branding or repackage it under their own?

These conversations will influence major clauses in your agreement, such as the scope of use, sublicensing rights, and maintenance responsibilities. They should be held well before a draft is prepared.

Step 4: Decide the scope of the licence

Now that you know what you are licensing and to whom, the next step is to draw a boundary around that license. Without limits, a licence can become dangerous, not just in terms of revenue loss, but also in terms of brand dilution and reputational risk.

Define the field of use clearly. If your software is meant for educational institutions, do say so. If your trademark is only to be used on mobile platforms but not on printed merchandise or packaging, make that explicit. Be precise. 

You will also need to specify the geographical territory, whether it is India only or worldwide. Define the duration: is this a one-year licence, renewable annually, or a fixed five-year term? If you want to include an option to extend the agreement, decide under what conditions and how that process will work.

Also, determine what happens when the agreement ends. Will the licensee be permitted to continue supporting existing users, or must all usage cease immediately? Will you allow them to sell of the remaining inventory or debrand the product?

Thinking through these situations in advance allows for smooth termination and prevents misunderstandings later.

Step 5: Documentation

At this stage, you are almost ready to draft the agreement. But before you do, gather the following:

• Any copyright or trademark registration documents
• A formal description of the software and its components
• Screenshots or visual representations of the trademark and branding
• Bank details for royalty payments, with GST details if applicable
• A mutually agreed email ID and postal address for official communication

If you are working with a lawyer, this is the information they will need. If you are drafting the agreement yourself, these documents will help you frame accurate and enforceable clauses.

Step 6: Talk about money upfront

Do not wait until the contract stage to discuss pricing. One of the most sensitive aspects of any licensing arrangement is the financial structure. You should not begin drafting clauses related to royalties or payment schedules unless there is a shared understanding of how the product will generate revenue and how that revenue will be shared.

Begin with the basics: is there a one-time licence fee? Is the agreement royalty-based, with periodic payments based on gross revenue or per-user pricing? Are there minimum guarantees to ensure that the licensee does not underperform while holding your licence? What happens if the licensee bundles your product with other services? Will your share be pro-rated, or will it be calculated based on individual value?

These are not just legal questions, they are commercial ones. They must be discussed early, documented clearly, and agreed upon in writing (even informally), so that the formal agreement simply captures what has already been decided in good faith.

Step 7: Consider what could go wrong, and address it in advance

Finally, take a moment to think pessimistically. What happens if the licensee misuses your brand? What if they stop paying? What if their business is acquired and your software is bundled into something you do not approve of? What if you want to terminate the arrangement early?

These are not abstract concerns. They are very real risks in any licensing deal. Your agreement should reflect what will happen in each of these scenarios. It should offer both sides a fair exit, a dispute resolution mechanism (such as mediation followed by arbitration), and clarity on what happens to the software, brand, and user data after termination.

By the time you reach the drafting table, these decisions should already be made. The agreement is not where you negotiate, it is where you document what has been negotiated.

Software and Trademark licensing agreement

Let us see how to draft an agreement. We will first set up a background based on which we will draft our agreement. 

The backstory: Meet Voro

Let me introduce you to Vinay J., a 21-year-old computer science student from Bengaluru. Over the past year, Vinay built a mental health journaling app called “Voro”, a clean, privacy-first tool designed for students to track mood, goals, and habits. The app has gained traction in schools and student communities, and now a Bengaluru-based ed-tech company, Blues Education Private Limited, wants to license Voro to integrate it into their digital wellbeing platform.

After a few discussions, both parties agree: they want to formalise the arrangement with a licensing agreement that clearly sets out the scope of use, ownership, royalties, and trademark use.

This Licensing Agreement is made and entered into on the 1st day of May, 2025 (“Effective Date”)

So with this information, let us draft the agreement. 

The very first step is the introduction of the parties, add in the details of the parties involved, including names and addresses. Also cover the recitals, which will explain why this agreement is being made. 

BY AND BETWEEN:

Vinay J., residing at No. 42, 3rd Cross, Jayanagar 4th Block, Bengaluru – 560011, Karnataka, India (hereinafter referred to as the “Licensor”, which expression shall unless repugnant to the context or meaning thereof, mean and include his heirs, legal representatives, and assigns);

AND

Blues Education Private Limited, a company incorporated under the Companies Act, 2013, bearing the Corporate Identification Number: ______ and having its registered office at 2nd Floor, Tower B, Prestige Tech Park, Outer Ring Road, Marathahalli, Bengaluru – 560103, Karnataka, India (hereinafter referred to as the “Licensee”, which expression shall unless repugnant to the context or meaning thereof, mean and include its successors and permitted assigns).

The Licensor and the Licensee are hereinafter individually referred to as a “Party” and collectively as the “Parties”.

RECITALS:

WHEREAS, the Licensor is the sole and rightful owner of a journaling software known as “Voro” (“Software”) and the associated trademark “Voro”, including its stylised ‘V’ logo (“Trademark”);

WHEREAS, the Licensee is engaged in providing digital learning and wellness solutions to schools and seeks to incorporate the Software into its existing mental health platform;

WHEREAS, the Licensee desires to obtain, and the Licensor agrees to grant, a non-exclusive, non-transferable licence to use the Software and Trademark strictly for the Field of Use defined herein;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the Parties agree as follows:

1. Definition.

You must define every important term used in the agreement. This avoids ambiguity later and limits the scope of interpretation. Since this is a software licensing agreement, you need to include the definition of: 

• “Software” – Define it as the code, interface, and associated documentation for Voro
• “Trademark” – Describe the logo and the name “Voro” as registered or pending
• “Field of use” – Specify it as student wellbeing and K-12 digital platforms
• “Territory” – India, and optionally “with possibility to extend subject to mutual written agreement”
• “Gross Revenue” – Clearly outline what is included and excluded in this term

You can add anything else that you might think fit. 

1. “Agreement” means this agreement, along with any schedule, annexure, exhibit hereto, and any updated version thereof.
   
   1. “Software” shall mean the mobile application titled “Voro”, including all source code, object code, interfaces, user documentation, design files, and associated content.
   2. “Trademark” shall mean the word mark “Voro” and the stylised “V” logo as owned and used by the Licensor.
   3. The mark and logo both are registered trademarks, with hte registration number ___.
   4. “Field of use” shall mean the use of the Software and Trademark within K-12 educational platforms and mental wellness services in India.
   5.  “Territory” shall mean the Republic of India.
   6. “Gross Revenue” shall mean the total monetary amount received by the Licensee from any use of the Software within the Field of Use, excluding applicable taxes. This means all revenue derived from the licensee’s use of the Software, including subscription fees and in-app purchases, net of refunds, discounts, and applicable taxes. 
2. Grant of License 

This clause tells the licensee what exactly they are allowed to do, and just as importantly, what they are not allowed to do. You need to include the nature of the licence (exclusive, non-exclusive) and whether sublicensing is allowed. You will also need to include whether the licence covers both software and trademarks, and any restrictions such as no resale, no modification, etc.

1. Subject to this Agreement and that the Company has legally acquired the right to use the Software, in terms hereof: (i) has paid the applicable price; and (ii) is using an authorised copy of the Software, Vinay J. grants, during the Term and the Company accepts, a non-exclusive, non-perpetual, non-transferable, limited license to the Company, to install, run, use, operate and perform (“Use”) the Software and Documentation. This license does not permit Licensee to: (i) Use the Software for a service bureau application; or (ii) sublicense, or rent the Software. The Licensor hereby grants to the Licensee a non-exclusive, non-transferable licence to use, integrate, distribute, and promote the Software and Trademark within the Field of Use and Territory for a term of five (5) years.
2. The Licensee shall not sub-license the Software or Trademark without the prior written consent of the Licensor.
3. The Licence does not confer ownership. All rights not expressly granted herein are reserved by the Licensor.
4. The Software must be promptly deleted in its entirety from any and all Installations no longer in use and from each backup copy for any such Installation.
5. The Licensee shall not modify, translate, decompile, or reverse-engineer the Software without the Licensor’s prior written consent, which shall not be unreasonably withheld for modifications necessary for integration within the Field of Use.
6. The Company agrees to use the Software in compliance with all applicable Laws, including local laws of the country or region in which the Company resides or in which the Company downloads or uses the Software.

3. Trademark usage

This is about brand control. You want to ensure the trademark is used in a manner consistent with your brand’s reputation. You can add how and where the trademark may be used and quality control rights. You can also add in requirements for attribution (e.g., “Licensed by Vinay J”), and approval process for marketing materials using the brand so that you will have covered everything. 

1. The Licensee may use the Trademark only in connection with the Software and must ensure all uses maintain the quality and goodwill associated with the mark.
2. The Licensee shall comply with the Licensor’s Brand Usage Guidelines (attached as Annexure A). The Licensor may conduct quarterly reviews of the Licensee’s use of the Trademark, and the Licensee shall provide samples of marketing materials upon request.
3. All marketing or promotional materials containing the Trademark shall be subject to prior written approval by the Licensor.
4. The Company shall include, and shall under no circumstances remove, the copyright, trademark, service mark, and other proprietary notices on any complete or partial copies of the Software, Documentation, third-party database, or Proprietary Information in the same form and location as the notice appears on the original work. The inclusion of a copyright notice on any portion of the Software, Documentation, third-party database, or Proprietary Information shall not cause or be construed to cause it to be a published work.

4. Royalty and payment terms

This is your return on your IP, which means you need to be clear, or risk underpayment or disputes. If you are having royalty as an option, then you need to include the royalty rate and the definition of revenue. You also need to mention when and how payments must be made and whether there is an upfront licence fee. Also include audit rights.

1. The Licensee shall pay the Licensor a royalty of ten per cent (10%) of the Gross Revenue generated from the use of the Software.
2. Royalty payments shall be made quarterly within thirty (30) days from the end of each calendar quarter.
3. During the Company’s normal business hours and at any time during Term, Licensor, or its authorised representative, shall have the right upon at least ___ days’ advance written notice to audit and inspect the Company’s utilisation of such items, in order to verify compliance with the terms of this Agreement.

5. Intellectual property ownership & protection of proprietary information

This clause confirms who owns what. Even if the licensee uses the software or trademark, they do not own it. You need to have it clearly mentioned that the ownership of the software and the trademark. You also need to mention that there will be no rights beyond what is explicitly licensed. You can also add a clause on improvements and modifications. You can also include that your work needs to be protected.

1. The Company acknowledges that ownership of and title in and to all IP rights, including patent, trademark, copyright, and trade secret rights, in the Licensor’s Proprietary Information are and shall remain in Licensor. The Company acquires only the right to Use the Proprietary Information and does not acquire any ownership rights or title in or to the Licensor’s Proprietary Information.
2. The Company shall not copy, translate, disassemble, or decompile, nor create or attempt to create, by reverse engineering or otherwise, the source code, object code, underlying structure, ideas, or algorithms of/ included in the Software and/ or the Documentation; and/ or modify, translate or create derivative works based on the Software and/ or the Documentation; and/ or copy, distribute, pledge, assign or otherwise transfer or encumber rights to Software and/ or the Documentation; in any manner, whatsoever. ln the event source code is provided to the Company, the Licensor, in its sole discretion, reserves the right to delete, or to require the deletion of, such source
3. Any enhancements or modifications shall be disclosed and owned by the Licensor unless otherwise agreed in writing.
4. In order to protect the rights of Licensor in their respective Proprietary Information, the Company agrees to take all reasonable steps and the same protective precautions to protect Proprietary Information from disclosure to third parties as with its own proprietary and confidential information. Without Licensor’s prior written consent, the Company shall not disclose, provide, or make available any of Licensor’s Proprietary Information in any form to any other Person.

6. Confidentiality

You may share source code, business plans, or sensitive user data. This clause prevents misuse. 

1. The Licensee agrees to maintain the confidentiality of all non-public information, including the source code, methods, and technical documentation.
2. This obligation shall continue perpetually following termination.

7. Warranties and indemnity

This outlines what each party guarantees and who is responsible if something goes wrong. So, you need to include the licensor’s warranty that they own the IP and the licensee’s warranty that they will comply with laws. You can also add indemnity by licensee for third-party claims.

1. The Licensor warrants that he is the lawful owner of the Software and Trademark.
2. Indemnification of the Company – Licensor shall indemnify, and defend the Company from and against all claims, liabilities, and costs, reasonably incurred in the defence of any claim brought against the Company by third parties alleging that the Company’s Use of the Software and Documentation infringes or misappropriates: (i) a copyright; or (ii) trade secret rights, provided that, the Company promptly notifies the Licensor in writing of any such claim and Licensor is permitted to control fully the defence and any settlement of such claim. The Company shall cooperate fully in the defence of such claim and may appear, at its own expense, through counsel reasonably acceptable to Licensor. Licensor may, in its sole discretion, settle any such claim on a basis requiring Licensor to substitute for the Software and Documentation alternative equivalent non-infringing programs and supporting documentation.
3. Indemnification of Licensor – The Company shall indemnify, defend and hold Licensor, harmless at all times against all claims, liabilities, cost, expenses, including reasonable legal fees, reasonably incurred in the defense of any claim, arising out of any third party claims, and/ or the Company’s unauthorised Use of the Software, Documentation, third-party database, items of Other Licensors, and other Licensor Proprietary Information, licensed under this Agreement, and/ or breach/ violation/ default of any of the terms and conditions of this Agreement and/ or the Purchase Order.

You can also add the right of the licensor to commence infringement actions and also the licensor’s duty to indemnify losses.

8. Term and termination 

This is important because agreements end, and you need clarity on what happens when they do. You need to include fixed term and renewal conditions, rounds for early termination (breach, non-payment) and obligations on termination (return of IP, final royalty payment)

1. This Agreement shall remain in force for a period of five (5) years unless terminated earlier as per clause 8.2.
2. Either Party may terminate this Agreement by giving thirty (30) days’ written notice in case of material breach, including non-payment of royalties or unauthorised use of the Software or Trademark
3. Upon termination, the Licensee shall cease all use of the Software and Trademark and delete all copies in its possession.

9. Force Majeure 

Why do you need this clause? You need this because something could happen which is out of both parties’ control. 

1. If a party (the “Affected Party”) is prevented, hindered or delayed from or in performing any of its obligations under this Agreement by a Force Majeure Event:
2. The Affected Party’s obligations under this Agreement are suspended while the Force Majeure Event continues and to the extent that it is prevented, hindered or delayed;
3. As soon as reasonably possible after the start of the Force Majeure, the Affected Party shall notify the other party in writing of the Force Majeure Event, the date on which the Force Majeure Event started and the effects of the Force Majeure Event on its ability to perform its obligations under this Agreement;
4. The Affected Party shall make all reasonable efforts to mitigate the effects of the Force Majeure Event on the performance of its obligations under this Agreement; and as soon as reasonably possible after the end of the Force Majeure Event the Affected Party shall notify the other party in writing that the Force Majeure Event has ended and resume performance of its obligations under this Agreement.
5. If the Force Majeure Event continues for more than three months starting on the day the Force Majeure Event starts, the non-Affected Party may terminate this Agreement by giving not less than 30 days’ written notice to the Affected Party.
6. In this Clause, “Force Majeure Event” means an event beyond the reasonable control of the Affected Party including, without limitation, cyberattacks, server outages, governmental orders restricting software use, act of God, war, riot, civil commotion, malicious damage, regulation or direction, accident or breakdown of plant or machinery not due to the negligence of the Affected Party, fire, flood and storm.

10. Dispute resolution 

You need to have a dispute resolution clause because if the relationship breaks down, you need a civilised exit route. You can add mediation or arbitration before going to court and the specific jurisdiction (helpful if parties are in different states or countries). You need to also mention the choice of governing law

1. Dispute resolution 
2. Any disputes shall first be resolved by mutual consultation. If unresolved within thirty (30) days, it shall be referred to arbitration under the Arbitration and Conciliation Act, 1996.
3. In case the dispute is not resolved within a reasonable time, the Parties agree to submit the same for arbitration. The arbitration proceedings shall be governed by the provisions of the Arbitration and Conciliation Act, 1996 and its amendments thereafter. The panel for the arbitration proceedings shall be mutually agreed upon by both parties. 
4. Arbitration proceedings shall be conducted in the English language, with a single Arbitrator, and the place, venue and seat shall be at Bangalore. The award of the arbitration proceedings shall be final and binding on the Parties. All arbitration awards shall be in writing and shall state the reasons for the award.  This Agreement shall be governed by the laws of India.

11. Miscellaneous

1. This Agreement constitutes the entire agreement between the Parties.
2. Any amendment must be in writing and signed by both Parties.
3. Notices shall be sent to the addresses mentioned in the recitals via registered post or email with acknowledgement.
4. If any provision of this Agreement is found to be unenforceable, the remaining provisions shall remain in full force and effect

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date first above written.

For the Licensor:

Signature: ___________________ Name: Vinay J. Date: 1 May 2025

For the Licensee:

Signature: ___________________ Name: [Authorised Signatory] Designation: [Designation] Date: 1 May 2025

Conclusion

Drafting a licensing agreement is not merely a legal formality, it is your first line of protection and your clearest tool of communication when sharing your intellectual property. Whether you are a developer, a parent, or a company, defining the scope, rights, and obligations upfront ensures that everyone involved moves forward with clarity and confidence.

This agreement between Vinay J. and Blues Education Pvt. Ltd. is more than just paperwork. It is a framework for collaboration, respect for creative effort, and mutual benefit. As you draft your own agreements, remember: the best contracts do not just anticipate success, they plan for the unexpected, too.

If you found this guide helpful and need support drafting similar agreements, I am here to help.

FAQs

1. When should I use a licensing agreement instead of selling IP rights?

You can use a licensing agreement when you want to retain ownership of your IP while allowing others to use it under defined terms, especially to generate revenue without losing control over your IP. 

2. Can I license only certain parts of my software or brand, instead of the whole?

Yes, you can license specific modules of software or limited trademark elements (like a logo without the brand name). The agreement must clearly mention what is and is not included. 

3. How do I handle updates and improvements to the software post-licensing?

You can specify whether updates are included, charged separately, or excluded. It is also important to define who owns any improvements made by the licensee. 

4. What if my trademark becomes more valuable during the term? Can I renegotiate the license? 

Not automatically. Unless the agreement includes a renegotiation clause, the original terms will apply for the full term. 

5. Can I include performance benchmarks or usage obligations in the license?

Yes, you can include minimum performance obligations (e.g., minimum sales targets or active users), and failure to meet them can trigger termination or penalties.