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

Parties — legal names, entity types, jurisdictions, signatory authority.
Know-how scope — technical description, confidentiality level, exhibit references.
Field & territory — permitted uses, industries, geographies, manufacturing vs. sales scope.
Exclusivity — exclusive / sole / non-exclusive; sublicensing position.
Economics — upfront fee, royalties, milestones, minimums, audit terms.
Transfer plan — documentation, training, support, timelines.
Diligence — milestones, reporting, commercialization obligations.
Compliance — export controls, regulatory approvals, industry rules.
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.

| Item | Required Detail | Source | |---|---|---| | Parties | Full legal name, entity type, jurisdiction, address | Term sheet / records | | Know-how | High-level description, confidentiality qualifiers | Tech schedule | | Field of use | Industry, product, application limits | Term sheet | | Territory | Countries/regions, manufacturing vs. sales scope | Term sheet | | Exclusivity | Exclusive/sole/non-exclusive, licensor carve-outs | Term sheet | | Sublicensing | Allowed scope, consent requirements, pass-through terms | Term sheet | | Consideration | Upfront, milestones, royalties, minimums | Term sheet | | Royalty base | Net sales definition, deductions, bundles | Finance notes | | Support | Training, tech transfer, validation, response times | Tech plan | | Improvements | Ownership, grant-back, joint development | Negotiation | | Compliance | Export, regulatory, anti-corruption | Compliance team | | Disputes | Governing law, venue, arbitration | Counsel |

Step 2: Draft Definitions

| Term | Drafting Notes | |---|---| | Know-How / Licensed Technology | Identify by category + confidential schedule reference | | Confidential Information | Standard exclusions + trade secret status | | Field of Use | Clear boundary conditions and examples | | Territory | Manufacturing vs. sale/import scope | | Net Sales | Allowed deductions list | | Improvements | Scope definition and ownership triggers | | Affiliate | Control threshold and inclusion criteria | | Milestone | Objective criteria + dates |

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

| Scenario | Ownership | License Back | |---|---|---| | Licensor-only | Licensor | Included or separate fee | | Licensee-only | Licensee | Grant-back terms | | Joint | Joint / by inventorship | Cross-license scope |

Termination Triggers

| Trigger | Cure Period | Effect | |---|---|---| | Material breach | 30-60 days | Termination | | Non-payment | Short cure | Termination or conversion | | Confidentiality breach | None | Immediate termination | | Insolvency | 30-90 days | Automatic termination | | Diligence failure | N/A or short | Convert exclusivity or terminate |

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].