LAW OF OBLIGATION ACT, PART 3, CHAPTER 18

Chapter 18

LICENCE AGREEMENT 

  • 368. Definition of licence agreement

By a licence agreement, one person (the licensor) grants another person (the licensee) the right to exercise the rights arising from intellectual property to the agreed extent and on the agreed territory, and the licensee undertakes to pay a fee (the licence fee) therefor.

  • 369. Prerequisites for validity of right of use

(1) In the cases provided by law, it is necessary, in order for the right of use arising from a licence agreement to be created, for an entry to be made in a register in which the property concerning which the agreement is entered into has been entered.

(2) The licensee shall exercise the rights arising from a licence agreement if the licensor has a legitimate interest in the rights arising from the licence agreement being exercised, particularly if the existence of the rights arising from the licence agreement depends on the exercise of these rights.

  • 370. Non-exclusive licence agreement and exclusive licence agreement

(1) In the case of a non-exclusive licence agreement, the licensor may also exercise the right which is the object of the agreement or grant the right of use to other persons besides the licensee.

(2) An exclusive licence agreement grants the licensee the right to exercise the rights arising from intellectual property to the agreed extent and precludes the right of use of other persons and of the licensor to the same extent.

(3) If the right of use to which a licence agreement extends is not clearly specified in the agreement, the extent of the right of use shall be determined pursuant to the objective of the agreement.

(4) The right of use arising from a non-exclusive licence agreement which arises before the right of use arising from an exclusive licence agreement shall remain valid in respect of the person who was granted the right of use on the basis of the exclusive licence agreement.

  • 371. Transfer of right of use arising from licence agreement

(1) It is presumed that the right of use arising from a licence agreement may be transferred only with the consent of the licensor. The licensor shall grant consent if this can be expected of the licensor based on the principle of good faith.

(2) The provisions of subsection (1) of this section do not apply upon transfer of an enterprise if the right of use belongs to the enterprise.

  • 372. Communication of information

(1) The licensor shall deliver documents and communicate information necessary for exercise of the rights pursuant to the agreement to the licensee within a reasonable time after entry into the agreement.

(2) The licensee shall maintain the confidentiality of documents delivered and information communicated to the licensee unless:

1) the licensee communicates the information to persons who work in licensee’s enterprise and who are required to maintain the confidentiality of the information;

2) the licensor cannot be expected to intend to maintain the confidentiality of the information based on the agreement or the nature of the delivered documents and communicated information.

(3) After expiry of an agreement, the licensee shall return the documents which have been delivered to the licensee to the licensor and maintain the confidentiality of the received information.

  • 373. Protection of rights

If a third party hinders a licensee when the licensee is exercising the rights thereof arising from a licence agreement or if a third party violates these rights, the licensee shall promptly give notification thereof to the licensor who shall immediately take all necessary measures to enable the rights arising from the licence agreement to be exercised and to terminate the violation of the rights of the licensee. If the licensor takes such measures, the licensee shall co-operate with the licensor to the necessary extent.

  • 374. Cancellation of agreement entered into for unspecified term

Either party may cancel an agreement entered into for an unspecified term by giving at least one year’s notice.

Chapter 19

FRANCHISE CONTRACT 

  • 375. Definition of franchise contract

By a franchise contract, one person (the franchisor) undertakes to grant to another person (the franchisee) a set of rights and information which belongs to the franchisor for use in the economic or professional activities of the franchisee, including the right to the trade mark, commercial identifications and know-how of the franchisor.

  • 376. Obligations of franchisor

The franchisor is required to provide the franchisee with instructions for the exercise of the rights thereof and to provide permanent assistance related thereto to the franchisee.

  • 377. Obligations of franchisee

A franchisee is required:

1) in the activities thereof, to use the commercial identifications of the franchisor;

2) to ensure that the quality of the goods manufactured or services provided by the franchisee pursuant to the contract is the same as those manufactured or provided by the franchisor;

3) to follow the instructions of the franchisor which are directed at the exercise of rights on the same bases and in the same manner as the franchisor;

4) to provide clients with all additional services which they could expect upon acquiring goods or contracting for services from the franchisor.

  • 378. Franchisor’s right to check

A franchisor has the right to check the quality of the goods manufactured or services provided on the basis of a franchise contract by the franchisee.

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