License agreement in Armenia

Under the Civil Code of the Republic of Armenia, a licensing agreement, the patent holder (licensor) undertakes to grant another party (licensee) the right to use an object protected by a patent within the scope stipulated by the agreement, while the licensee undertakes to pay the licensor the remuneration specified in the agreement and to perform other obligations provided therein. 

Protected subject matter may encompass tangible assets; however, it most commonly refers to intellectual property, including copyrighted works, trade secrets, trademarks, brand names, and patents. License agreements do not transfer ownership of the protected asset to the licensee; rather, they confer a limited right of use in accordance with the terms and conditions of the agreement. 

License agreements in the Republic of Armenia are governed by:

• The Civil Code of the Republic of Armenia 
• The Law of the Republic of Armenia on Copyright and Related Rights 
• The Law of the Republic of Armenia on Patents 
• The Law of the Republic of Armenia on Trademarks 
• International treaties ratified by the Republic of Armenia, including the TRIPS Agreement and WIPO conventions

One of the distinctive features of a license agreement is that it may provide for additional terms related to the specific modalities of use of the licensed object. Such terms may include, inter alia, the provision of technical assistance to the licensee in organizing the production of the patented product, the obligation to maintain industrial secrecy, arrangements concerning advertising and promotion of the product, the reservation of rights of third parties, and other related matters. Importance among the terms of a license agreement is attached to the determination of the amount of the licensing remuneration payable to the patent holder (licensor) and the procedure for its payment. As a rule, the amount and payment procedure of the licensing remuneration are determined by one of the methods: either by specifying a fixed (pre-calculated) sum, or by providing for the payment of a certain percentage of the value of the licensed product, the profit derived from its sale, or other economic indicators (commonly referred to as royalties). 

Armenian law recognizes several types of licenses:

1.       Exclusive License – the licensee is granted exclusive rights of use, and the licensor may be restricted from granting licenses to third parties or from using the object personally, if so agreed.

2.       Non-Exclusive (simple) License – the licensor retains the right to use the object and to grant licenses to multiple licensees. This is the most common form in commercial practice.

3.       Sole License – the licensor retains personal use rights but is prohibited from licensing the object to third parties

A license agreement must be concluded in written form and registered with the Intellectual Property Agency. 

Who has the right to carry out activities subject to licensing? 

According to the Law of the Republic of Armenia on licensing:

1. Legal and natural persons 
2. Commercial organizations 
3. Non-commercial organizations 
4. The individual entrepreneur 
5. Capable natural persons 
6. State or community institutions not considered state or local self-government bodies 
7. Foreign legal persons
8. Legal persons of the member states of the Eurasian Economic Union and the European Union, as well as the United States of America, Canada, South Korea, the People’s Republic of China, Japan, the United Kingdom of Great Britain and Northern Ireland, the United Arab Emirates, Georgia, the Islamic Republic of Iran

A license may be terminated in the following cases:

• Where, false or misleading information deemed essential for the granting of the license is discovered in the documents submitted for obtaining the license 
• Where, the legal entity carrying out the licensed activity is liquidated, the activity of an individual entrepreneur is terminated, or the natural person holding the license dies
• Where, serious harm has been caused as a result of performing an activity subject to licensing 
• Where, during the period of suspension of the license, the suspended activity, a specific function of that activity, or an operation reserved by the license is carried out in violation of the conditions of suspension 
• upon the application of the licensee 
• upon expiration of the license 
• in other cases, provided for by law 

 

Rights of the Licensee	Rights of the Licensor
use the licensed intellectual property object in accordance with the scope and conditions set out in the license agreement	receive licensing remuneration in the amount, form, and manner stipulated by the license agreement
derive economic benefit from the lawful use of the licensed object	retain ownership of the exclusive intellectual property rights to licensed object
receive technical support or assistance from the licensor, where provided for by the agreement	determine and control the scope, methods, territory, and duration of the licensed use
grant sublicenses, provided that such right is expressly authorized by the license agreement	grant licenses to third parties, unless the agreement provides for an exclusive license
seek legal protection against unlawful interference with the licensed use	demand proper and lawful use of the licensed object in accordance with contractual terms
	Terminate the license agreement in cases of material breach by the licensee, including non-payment of remuneration
Obligations of the Licensee	Obligations of the Licensee
pay licensing remuneration in a timely and proper manner	ensure the validity and lawful existence of the intellectual property rights at the time of granting the license
use the licensed object strictly within the limits established by the license agreement	grant the licensee the right to use the licensed object within the limits defined by the agreement
maintain confidentiality with the respect to know-how, trade secrets, and other confidential information	refrain from interfering with the licensee’s lawful use of the licensed object
comply with quality requirements and other conditions related to the use of the licensed object, where applicable	provide technical documentation, information, or assistance, if stipulated by the agreement
provide reports on the use of the licensed object, if required by the agreement	take measures to protect the licensed object against infringements by third parties, where such obligations is assumed under the agreement
cease use of the licensed object upon termination or expiration of the license agreement

 

Author: Ani Hakobyan