For tech founders, licensing your technology can be a powerful way to scale, generate revenue, and expand market reach without losing control of your IP. Whether you’re developing SaaS, AI-driven tools, or proprietary software, structuring your licensing agreements correctly is going to be an important factor to consider as you scale.
Get it wrong, and you could risk legal disputes, revenue loss, or even an unintended transfer of your intellectual property.
So, what do you need to know before licensing your tech? Here’s a breakdown of the key legal and commercial considerations.
1. Retain ownership of your IP
One of the biggest mistakes tech businesses make when licensing their product is failing to properly protect their intellectual property. Your technology is probably your most valuable asset, one that needs clear ownership terms to prevent disputes down the line.
Key considerations:
✔ Ensure your licensing agreements explicitly state that you (the licensor) retain full ownership of the technology.
✔ Consider trademark and copyright protections to prevent unauthorised use.
✔ If third-party developers or contractors have contributed to the product, make sure IP ownership is clearly assigned to your business in their employment or contractor agreements with you.
2. Define the scope of the licence
Clarity is everything when it comes to licensing terms. A vague contract could lead to misunderstandings and even litigation.
Ask yourself:
- Is the licence exclusive or non-exclusive? Will multiple licensees have access to the same product?
- What are the geographical limits? Does the agreement cover the UK only, or will it extend globally?
- Are there any usage restrictions? Can the licensee modify, distribute, or sublicense your technology?
Being precise about how your product can be used protects both your revenue streams and your competitive edge.
3. Set clear payment terms
How you structure licensing fees will have a direct impact on your business’s cash flow. Common models include:
✔ One-time licence fee: A fixed upfront payment for the right to use your technology.
✔ Recurring royalties: Payments based on usage, revenue share, or a set timeframe (e.g., monthly or annually).
✔ Tiered pricing: Offering different levels of access or functionality at varying price points.
Your agreement should be crystal clear on when and how payments are made, and what happens if the licensee fails to pay.
4. Limit your liability
Licensing agreements often contain warranty and liability clauses that could expose your business to risk. Be careful about over-promising or agreeing to unlimited liability.
✔ Set reasonable warranties: Clearly state what you do, and don’t, guarantee. For example, you might warrant that your software will perform as described, but not that it will be 100% bug-free.
✔ Cap liability: Limit financial exposure in the event of a dispute. Many agreements set a liability cap at the total licensing fees paid.
✔ Indemnity protections: If your licensee misuses your software or breaches the agreement, your contract should protect you from resulting legal claims.
5. Plan for termination & renewal
No licensing deal should last forever without review. You need clear terms on how and when the agreement can be terminated or renewed.
✔ Duration: Is the licence fixed-term or rolling?
✔ Breach of contract: What happens if the licensee violates the terms? Can you terminate immediately?
✔ Exit strategy: If the licensee stops using your tech, how will they ensure data is returned or deleted?
Setting out these conditions from the start avoids uncertainty later.
6. Don’t rely on templates
Legal templates certainly have their place in the world but when it comes to licensing agreements, these rarely offer the specific protections your business needs. Licensing terms should be tailored to your product, industry, and growth strategy.
This becomes increasingly important if you’re licensing overseas or to larger organisations, when you’ll need to ensure your business is adequately protected.
At Jamieson Law, we work with tech businesses to ensure their licensing agreements are robust, commercially sound, and legally watertight. If you’re considering licensing your technology, let’s talk.
Get in touch HERE and we’ll book in a complementary discovery call to discuss your requirements in more detail.
Jamieson Law offers fixed fee quotes based on the information you’ve shared allowing you to plan your costs and proceed with certainty.
