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Chapter 7. Licensing > Summary - Pg. 239

Licensing 239 · What are the licensee's obligations? Obligations may include: the licensee will neither produce nor sell any competing product; the licensee will not sell the product outside of the licensed territory; the licensee will provide adequate warranty and customer service for the product; the licensee will indemnify the licensor from any harm caused by licensee's product; the licensee will prominently display the licensor's mark on all licensed goods. · Other concerns. A licensor needs to be concerned with several other issues, including: · A licensee's failure to exploit the license or create value for the licensor (generally addressed by having short initial terms with renewal thresholds such as $ X in royalties or X number of products). · Disclosure of confidential information that may destroy trade secret protection, or losing other intellectual property rights due to licensor's use. This must be handled delicately and expertly, as non-disclosure agreements may not be sufficient to protect the property. · Currency fluctuation and government control on outflow of cash. · Responsibility for import and customs fees, as well as VAT or any other taxes. · How the product will be advertised and who will pay for it (usually the licensee). · Governing law and dispute resolution. Be aware that the validity of these terms may be subject to your licensee's local law. Example: your contract states that California law will govern the contract, but the law of your licensee's jurisdiction makes that clause illegal. Example: your contract states that any awards from arbitration may be entered in any court with jurisdiction over the parties. You enter the judgment in your jurisdiction, but the licensee doesn't have any assets in your jurisdiction. In this situation, you would probably have to enforce the judgment in the licensee's jurisdiction.