How to review an IP licence agreement under English law

A licence lets someone use intellectual property without owning it. Under English law the type of licence, the formalities and the competition law position all affect what the licensee can actually do and enforce. This checklist covers patent, copyright, software and trade mark licences and how to review one in Word with LexDraft.

Last checked: 18 October 2026. The law changes; check the current position before relying on this page.

This guide covers the law of England and Wales. Scotland and Northern Ireland have their own rules on several of the points below.

Clause checklist

• Type of licence. Exclusive (only the licensee, not even the licensor, may use the IP), sole (licensor and licensee only) or non-exclusive. Check that the label matches the operative wording.
• Licensed rights and field. Which patents, copyright works, trade marks, designs or know-how, for which products, field of use, territory and term.
• Formalities. An exclusive copyright licence must be in writing signed by or on behalf of the copyright owner to give the licensee rights under the Copyright, Designs and Patents Act 1988 (sections 92 and 101). A trade mark licence is not effective unless it is in writing signed by or on behalf of the grantor (Trade Marks Act 1994, section 28).
• Registration. Register trade mark licences (section 25 of the Trade Marks Act 1994) and exclusive patent licences (sections 33 and 68 of the Patents Act 1977) at the UK Intellectual Property Office. Late registration can affect a licensee's rights against infringers and its recovery of costs or damages.
• Enforcement. Who may sue infringers, who controls the proceedings and who keeps any damages. An exclusive licensee of a patent or copyright has its own statutory right to sue, alongside the owner.
• Software. A lawful user of a computer program has rights to make a necessary back-up copy, to decompile for interoperability and to observe, study and test the program (sections 50A to 50BA of the CDPA). Contract terms that try to prevent these are void (section 296A).
• Payments. Upfront fees, royalties, the royalty base, minimum royalties, reports, audit rights and withholding tax.
• Improvements. Who owns improvements made by each party, and whether there are grant-back licences.
• Sublicensing and assignment. Whether the licensee can sublicense or transfer the licence, for example on a sale of its business.
• Competition law. Exclusivity, territorial restrictions, non-challenge clauses and exclusive grant-backs can raise issues under the Competition Act 1998. The retained EU technology transfer block exemption was due to expire on 30 April 2026 and the CMA recommended a UK replacement, so check which block exemption and guidance apply to your licence today.
• Termination. Termination for breach and insolvency, what happens to sublicences, and sell-off rights for existing stock.
• Liability. Warranties of ownership and non-infringement, IP indemnities, and exclusions of liability. Check standard terms against the reasonableness test in the Unfair Contract Terms Act 1977.

Review the licence agreement in Word with LexDraft

1. Open the licence agreement in Word, open LexDraft from the Home tab and set the jurisdiction chip to UK: England & Wales (or UK: Scotland or UK: Northern Ireland if that is the governing law).
2. Run the quick checks. They are rule-based and run without AI, catching undefined or unused defined terms, broken cross-references, numbering gaps and inconsistent capitalisation.
3. LexDraft has four built-in playbooks (NDA, SaaS MSA, DPA and services agreement) and no dedicated IP licence playbook, so run a general review against English law and use the checklist on this page to direct your own read. If the document is really a cloud subscription, the SaaS MSA playbook covers the service terms. Findings are graded Critical, High, Medium or Low, and LexDraft flags standard terms that are missing.
4. Accept or reject each proposed redline. Accepted edits land as native Word tracked changes, ready for the other side.
5. Ask the Assistant to explain a clause in plain English or suggest wording for your side. Answers use UK spelling.
6. Look up any case you want to rely on in the Case law tab, then open the judgment on Find Case Law and read it yourself. UK judgments in LexDraft come from The National Archives' Find Case Law service, which only partially represents the activities of the courts and tribunals. Not every judgment or decision is included. Find Case Law does not include judgments from Scottish or Northern Irish courts or tribunals.

LexDraft does not give legal advice and does not summarise judgments. AI output can be wrong, so qualified counsel must check every redline before it goes out.

Common mistakes

• Calling a licence "exclusive" while reserving the licensor's own right to use the IP. That is a sole licence.
• Defining "Licensed IP" by reference to a schedule that is never attached. The cross-reference check catches this.
• Royalty clauses that use "Net Sales" and "Net Revenue" interchangeably. The defined-term check catches this.

This guide is general information, not legal advice. LexDraft does not give legal advice; qualified counsel must review every draft. LexDraft is not affiliated with or endorsed by The National Archives or any court. Spotted something out of date? Email support@lexdraft.ai and we will fix it.