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What are the standard clauses for a cross-licensing agreement?

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Introduction

A cross-licensing agreement is a contract between two or more parties where each party grants rights to their intellectual property to the other parties. This type of agreement is common in industries where companies hold large patent portfolios and wish to avoid litigation while fostering innovation. In Kenya, such agreements must comply with the relevant laws and regulations, including the Constitution of Kenya, the Industrial Property Act, and the Competition Act.

Governing Laws and Regulations
- Constitution of Kenya
- Industrial Property Act
- Competition Act
Standard Clauses in a Cross-Licensing Agreement
- Definitions
- Grant of License
- Term and Termination
- Royalties and Payments
- Confidentiality
- Warranties and Representations
- Indemnification
- Dispute Resolution
- Governing Law
- Miscellaneous Provisions
Conclusion

1. Governing Laws and Regulations

Constitution of Kenya

Article 40: Protects the right to property, including intellectual property.
Article 46: Provides for consumer rights, which can be relevant in the context of licensing agreements.

Industrial Property Act

Section 58: Governs the licensing of patents and utility models.
Section 59: Outlines the requirements for a valid licensing agreement.
Section 60: Provides for the registration of licensing agreements.

Competition Act

Section 21: Prohibits agreements that prevent, restrict, or distort competition.
Section 22: Provides for exemptions to the prohibitions under certain conditions.

2. Standard Clauses in a Cross-Licensing Agreement

Definitions

Purpose: To clearly define the terms used in the agreement.
Example: "Licensed Patents" means all patents and patent applications owned or controlled by a party as of the effective date of this agreement.

Grant of License

Purpose: To specify the scope and limitations of the licenses granted.
Example: Each party hereby grants to the other party a non-exclusive, royalty-free license to use, make, and sell products covered by the Licensed Patents.

Term and Termination

Purpose: To define the duration of the agreement and the conditions under which it can be terminated.
Example: This agreement shall remain in effect for a period of ten (10) years from the effective date unless terminated earlier in accordance with the provisions herein.

Royalties and Payments

Purpose: To outline the financial terms, including any royalties or payments.
Example: Each party shall pay to the other party a royalty of 5% of the net sales of products covered by the Licensed Patents.

Confidentiality

Purpose: To protect the confidential information exchanged between the parties.
Example: Each party agrees to maintain the confidentiality of any proprietary information disclosed by the other party and to use such information solely for the purposes of this agreement.

Warranties and Representations

Purpose: To provide assurances regarding the validity and enforceability of the licensed intellectual property.
Example: Each party represents and warrants that it has the right to grant the licenses specified in this agreement and that the Licensed Patents are valid and enforceable.

Indemnification

Purpose: To allocate the risk of third-party claims.
Example: Each party agrees to indemnify and hold harmless the other party from any claims, damages, or liabilities arising from the use of the Licensed Patents.

Dispute Resolution

Purpose: To provide a mechanism for resolving disputes that may arise under the agreement.
Example: Any disputes arising out of or in connection with this agreement shall be resolved through arbitration in accordance with the rules of the Chartered Institute of Arbitrators, Kenya Branch.

Governing Law

Purpose: To specify the legal framework that will govern the agreement.
Example: This agreement shall be governed by and construed in accordance with the laws of Kenya.

Miscellaneous Provisions

Purpose: To address any additional terms and conditions.
Example: This agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral.

Conclusion

A cross-licensing agreement is a complex legal document that requires careful drafting to ensure compliance with Kenyan laws and regulations. The standard clauses outlined above provide a framework for such agreements, but it is essential to tailor each clause to the specific needs and circumstances of the parties involved. Legal advice should be sought to ensure that the agreement is both legally sound and commercially viable.