IPR-Helpdesk website
Accessibility
icon News feed
icon Sitemap
icon Only Text
Free of charge helpdesk on Intellectual Property Rights related issues in EU-funded projects
How can I manage the IP related issues in a EU project?
icon-section FP7 :: Use_and_dissemination
bigger text
smaller text
print in pdf
print in printer
Applicable law for international IP rights licensing contracts
Last updated June 2007


1. Introduction

Often licences for intellectual property (IP) rights, alone or in the framework of research and technological development (RTD) projects (hereinafter “IPR contracts”), are of an international character. This means they are connected to more than one State, either because the parties are domiciled in different countries or because the rights are to be exploited abroad. Since these contracts are connected to more than one State, it is necessary to determine which law is applicable to the contract.

In the EU, this question is determined by the Rome Convention 1980 on the law applicable to contractual obligations. The courts of the Member States are always obliged to apply this Convention, even if none of the parties resides in a Member State, or if the law applicable in accordance with the provisions of the Convention is that of a third State.


2. The law applicable to IPR contacts

According to the Rome Convention, the law applicable to an IPR contract is the one chosen by the parties. In the absence of such a choice, the contract will be governed by the law of the State most closely connected to the contract.


2.1 Choice of law agreements

The parties to an IPR contract can, therefore, choose the national law they like best and can be sure that that same law will apply throughout the whole relationship.

The Convention would also allow the parties to choose the law applicable to a part of the contract while the rest of the agreement is governed by another law.

For example, in an RTD project, several results have been patented. The owner, a French institution, negotiates with a German company for a licence to manufacture and distribute the patented products in Germany. In addition, the French institution will provide technical assistance services to the German company during the first year for the manufacturing operations. According to the Rome Convention, the parties can agree to submit the IPR licence to German law and the contracts for the provision of technical assistance to French law.



2.2 The law applicable to IPR contracts in the absence of choice of law agreement

In the absence of a choice-of-law agreement, the contract is governed by the law of the country that is most closely connected to it. It is presumed that the contract is most closely connected to the country where the party that is to comply with the characteristic performance of the contract has his habitual residence.

Ex: When a licensor transfers rights and the licensee does not assume any obligation at all, the “characteristic performance” is performed by the licensor. Thus the law applicable to the contract will be that of the State where the licensor resides.

However, when the licensor transfers the rights but the licensee assumes certain obligations, the latter shall be considered the “characteristic performer” if its obligations are more complex than those of the licensor. In such a case, the law applicable to the contract will be that of the State where the licensee resides.



There are two cases where the presumption is not applicable:

  1. If it appears from the circumstances of the contract as a whole that it is more closely connected with another country. This usually happens when licensee resides in the same country where the IP rights are to be exploited. In such case, even if the licensor is the characteristic performer, the law applicable to the contract will be that of the State where the IP rights are to be exploited;

  2. when it is impossible to identify the “characteristic performance” because the parties must comply with several obligations. In such cases, the judge will have to determine the law most closely connected to the contract without any help from a presumption. The applicable law will usually be again that of the State where the IP rights are to be exploited.


3. Questions included in and excluded from the scope of application of the law applicable to the contract

The law determined according to the above-mentioned rules will apply to any question deriving from the IPR contract: validity, interpretation, performance, etc. 1 However, there are certain aspects that are excluded from its scope:


3.1 Formal requirements.

The Rome Convention promotes international trade by facilitating the formal validity of international transactions. IPR contracts are valid as long as they comply with the requirements of: a) the law applicable to the contract; b) the law of the State where the contract is concluded; or (c) the law of any of the countries where the parties are located when the contract is concluded;


3.2 Questions concerning substantive aspects of the IP rights

Questions like ownership of the rights, transferability of the rights, limitations to the right of exclusivity, etc. are not contractual as such. Therefore, they are not governed by the Rome Convention. They are subject to the law governing the IP rights themselves (i.e. the law of the protecting country).

Ex: A company in Germany grants an exclusive patent licence to a Spanish company to manufacture the patented product in Spain. According to a clause in the contract, the law applicable is German law. Nonetheless, Spanish Law 7/1998 on standard-term contracts is of a mandatory nature. Therefore, the law applicable to the contract is German law, but if a complaint is filed in Spain the Spanish Law on standard-term contracts will also be applicable.



3.3 Mandatory rules

Finally, regardless of the law applicable to the contract, national courts are obliged to apply the mandatory rules established in their national laws. They can also take into account the mandatory rules of the laws of third States that are closely connected to the contract 2 . There are several mandatory rules that apply to IPR contracts and cannot be derogated from by the contract: rules on standard terms, competition law, rules imposing the contract to be concluded in writing, as mentioned before, etc.






1. A non-exhaustive list of the questions included in the scope on the lex contractus is found in Art. 10.

( «)
2. Art. 7 (1) and (2). In accordance with Art. 22, the courts of Germany, United Kingdom, Ireland, Luxembourg and Portugal do not apply paragraph 2.

( «)
CIP website 
IPR-Helpdesk is a constituent part of the IP Awareness and Enforcement: Modular Based Actions for SMEs project (IPeuropAware) 
which is financed by the CIP Programme, DG Enterprise and Industry of the European Commission
IPeuropAware website