Briefing papers

IP strategy

Drafting Heads of Terms for License Agreements

Colm MacKernan


The first step in any licensing strategy is to establish why you are licensing and what are the basic outlines of the licenses you plan to offer. Licenses are not identical; rather they are situational, reflecting the technology on offer and the commercial and business objectives of the licensor and the licensee, and each party’s need to protect itself. Moreover, licenses and heads of terms are not something that ‘legal’ should just throw together – rather what should be in the license terms depends on facts and information that needs to be supplied typically by the finance, marketing, operations and technology functions within a licensor’s business. The note below is designed to try to get these functions to think about the factors that need to be applied to a licensing decision and contribute their knowledge to working out what should be in the heads of terms.