The terms that decide how a deal will feel later

The payment looks fair and the project sounds fun, so you are tempted to skim the rest. Don't. How the deal feels a year from now depends on the quieter terms: who approves a change, who else can use the work, how sales are reported, and what happens if the project never launches. Read each clause by picturing the relationship next year.

Be clear about what is being granted

Check that the agreement names the parties, the exact work, and every use being granted. WIPO lists the rights granted, the field of use, the territory, exclusivity and duration as the core terms of a license. 1 Replace labels like "our content" or "your technology" with a list of titles, files or registrations. A vague label works while everyone remembers the conversation; it fails when the project grows or the people change.

Suppose a publisher wants your illustrations for a workbook. Go through the uses one by one: printed edition, downloadable version, translations, an app, advertising. Can the publisher edit the illustrations or combine them with other material? For each use, the agreement should say yes, no, or "only under a separate agreement".

Grant what the project needs now. WIPO's advice is "Don't give away more than necessary": limit an exclusive grant by field or territory, and prefer a renewable term over a long fixed one so you can leave if the collaboration fails. 1 If the publisher wants more, such as exclusivity, ask for more in return; WIPO notes that exclusive licenses should command higher up-front payments and royalties. 1

Read the last clause too. Most agreements end with an "entire agreement" clause saying the document replaces all earlier agreements and understandings. 2 Anything promised in an email or on a call belongs in the text before you sign.

Understand who else may use it

Know which of the three kinds of license you are signing 1:

• Exclusive: only the licensee may use the work in the agreed scope, which can shut out you as well.
• Sole: only one licensee, but you keep the right to use the work yourself.
• Non-exclusive: you can license the same work to others and you keep ownership.

Sublicensing is a separate question: can the licensee grant rights onward, and does it need your approval first? The agreement should say both. 1 If the publisher needs a printer or a distributor, allow sublicenses for those roles, with your written approval of the sublicensee and terms that match the main agreement. 2

Write your own future uses into the agreement as reserved rights: showing the work in your portfolio, keeping an existing product on sale, reusing earlier components in later projects. WIPO's sample license includes this kind of clause, where the licensor reserves the right to keep using the invention for named purposes. 2 A use that feels obviously yours will not be obvious to a company paying for exclusivity.

Separate rights from the work of delivery

The license says what the other side may do with the work. It does not say how much work you owe. Put delivery dates, file formats, rounds of revisions, technical support and approvals in writing, with numbers. WIPO lists documentation and consulting hours, free or paid, as licensor obligations to agree up front. 1

Settle three more points before you sign 1:

1. Improvements: who owns adaptations and new contributions, and whether each side gets access to the other's improvements.
2. Quality: the standards the partner must meet when it uses or adapts your work, and your right to check.
3. Milestones: for an exclusive deal, the launch dates, sales targets or minimum annual royalty the partner must meet. If it misses them, the agreement can end the license or turn it non-exclusive. 2

Back to the workbook: correcting a spelling mistake is not the same job as redrawing every page for an app. State which work the original fee covers and what you charge for the rest, so nobody finds out halfway through that they expected different things.

Read the promises about risk

A warranty is a promise written into the contract. If it turns out to be false, the other side may be able to end the agreement and sue for damages. Typical ones: you own the work and have the right to license it, and the work is original and not copied. 2 Make those promises only about material you created or hold in writing. If a collaborator controls part of the work, get their rights in writing first.

An indemnity is a promise to cover the other side's losses, including legal fees, if a third party makes a claim. In WIPO's sample clauses each party covers claims arising from its own acts and breaches, and the obligation does not apply where the claim comes from the other party's negligence or breach. 2 Check three things:

1. Coverage: if the publisher adds a photograph you did not supply, the indemnity should not make you responsible for it.
2. Limits: look for a cap on the amount and an exclusion of indirect or consequential losses. 2
3. Procedure: note how quickly you must report a claim and who controls the defense. WIPO's sample gives 20 days. 2

Before you sign a deal that asks you to give warranties or an indemnity, have a lawyer who handles IP licensing in the country whose law governs the contract read those clauses.

Imagine a delay and an ending

Read the payment, reporting, renewal, termination and dispute clauses together. Start with the money: an up-front lump sum, royalties on sales, or both. 1 For royalties, the agreement should require reports on a fixed schedule (once, twice or four times a year is common), records kept for a set period, and your right to inspect them. Inspection is usually at your cost unless it finds an underpayment above an agreed percentage; WIPO's sample uses 5%. 2

Then ask what happens if things go wrong. Common triggers for ending a license are non-payment, insolvency and a change of control of the licensee. 1 Prefer a notice-and-cure clause: the other party gets written notice and the agreement ends only if the problem is not fixed within a set time. 2 That protects you as much as it protects them.

Plan for the day after. The agreement should say whether confidential material must be returned and use of it stopped, whether sublicenses survive, and which clauses keep running after the end, such as confidentiality, access to records, dispute settlement and indemnities. 2 Ask your own questions too: what happens to unsold stock, and can buyers keep accessing what they already paid for?

Agree in the contract which country's law applies and where disputes will be heard. 1 If you want mediation or arbitration instead of court, both sides have to agree to it; the WIPO Arbitration and Mediation Center publishes model clauses and a Clause Generator you can use to draft one. 3

Keep the signed agreement and every signed change in one place. Agreements commonly require amendments to be agreed in writing 2, so put every change on paper and get it signed. A clear agreement does not predict that the relationship will fail. It gives both of you the same reference when plans or people change.