Know-How License Agreement

Know-How License Agreement

License agreement for confidential technical information and trade secrets where the licensed IP is not covered by patents. Sensitive know-how detail belongs in confidential exhibits, not in the agreement body.

Prerequisites

1. Parties — legal names, entity types, jurisdictions, signatory authority.
2. Know-how scope — technical description, confidentiality level, exhibit references.
3. Field & territory — permitted uses, industries, geographies, manufacturing vs. sales scope.
4. Exclusivity — exclusive / sole / non-exclusive; sublicensing position.
5. Economics — upfront fee, royalties, milestones, minimums, audit terms.
6. Transfer plan — documentation, training, support, timelines.
7. Diligence — milestones, reporting, commercialization obligations.
8. Compliance — export controls, regulatory approvals, industry rules.
9. Prior agreements — existing NDAs, collaboration agreements, or IP licenses.

If any prerequisite is missing, flag it as an open item and proceed with labeled assumptions.

Step 1: Deal Intake

Populate the intake table from term sheet, tech schedule, and counsel input.

Step 2: Draft Definitions

Step 3: Draft Agreement Sections

Follow this section order:

• [ ] Parties, recitals, background
• [ ] Definitions
• [ ] Grant of license — scope, exclusivity, field, territory
• [ ] Sublicensing — consent, flow-downs, termination effects
• [ ] Improvements/derivatives — ownership and grant-back
• [ ] Consideration — upfront, milestones, royalties, minimums
• [ ] Reports, records, and audit rights
• [ ] Confidentiality and trade secret safeguards
• [ ] Tech transfer — deliverables, training, support
• [ ] Diligence and performance milestones
• [ ] Representations, warranties, disclaimers
• [ ] Indemnification and procedures
• [ ] Limitation of liability and carve-outs
• [ ] IP ownership and enforcement
• [ ] Term, termination, wind-down
• [ ] Compliance — export control, regulatory
• [ ] Insurance (if required by risk profile)
• [ ] Dispute resolution and governing law
• [ ] General provisions; signatures; exhibits

Financial Terms

Upfront Fee: $[amount], due [date], creditable against royalties: [Yes/No]

Milestones:
- [Objective event] -> $[amount] due within [days]

Minimum Royalties:
- Year 1: $[amount]
- Shortfall consequence: [pay shortfall / convert exclusivity / termination]

Royalties:
- Rate: [x% of Net Sales / $ per unit]
- Bundled products: [allocation method]
- Affiliate sales: [FMV or transfer price standard]
- Reporting: [quarterly/monthly] within [days]
- Audit: [once/year], underpayment threshold [x%] shifts costs

Confidentiality Controls

• [ ] Care standard: at least reasonable, not less than own highest-value info
• [ ] Access limited to need-to-know personnel under written NDA
• [ ] Physical, technical, and administrative safeguards specified
• [ ] Compelled disclosure: notice + protective order + minimum disclosure
• [ ] Survival: perpetual or until public domain without breach
• [ ] Return/destroy materials on termination; officer certification

Improvements Ownership

Termination Triggers

Step 4: Attach Exhibits

• Exhibit A — Confidential know-how description
• Exhibit B — Tech transfer deliverables and timeline
• Exhibit C — Milestones and reporting format
• Exhibit D — Royalty report template

Guidelines

• Keep sensitive know-how detail in confidential exhibits, not the agreement body.
• Exclusivity must be paired with diligence milestones or minimum royalties.
• Define royalty base so it is mechanically auditable; specify deductions tightly.
• Include explicit export control language when export-controlled technology is involved.
• Use bold or caps for warranty disclaimers and limitation of liability.
• For international deals, confirm governing law and arbitration seat; flag choice-of-law concerns.
• Mark uncertain citations or statutory references with [VERIFY].