Licensing IP drives business growth but often sparks dispute. Excel V. Dyquiangco highlights how clear terms, smart strategies and strong IP protection can transform potential conflict into lasting, trust-based partnerships.  

In today’s innovation-driven economy, technology and intellectual property are often a company’s most valuable assets. Licensing these assets is a critical strategy for growth and collaboration. However, this also opens the door to complex and potentially damaging disputes.  

When disagreements over terms, usage or payments arise, they can quickly escalate, leading to costly litigation, operational disruption and the breakdown of crucial business partnerships. Having such disputes can’t be avoided, but they can be minimized. What to do then?  

According to Jean-Christophe Troussel, a partner at Bird & Bird in Brussels and the 2025-2026 president of the Licensing Executives Society International (LESI), in his experience, the key to minimizing the risk of future disputes lies less in the black letter of the contract and more in the mindset that guides its formation and in some post-contractual good hygiene.  

“Don’t get me wrong – contractual clauses do matter,” he said. “But seasoned negotiators know that the concept of a crystal-clear contract is aspirational more than actual. Some provisions are left deliberately vague, often to preserve some strategic flexibility. And even the clearest language can carry interpretations as varied as the interests at the table. For that reason, allow me to return to the importance of mindset, a kind of legal reflex that transcends the drafting process. What I call good legal hygiene forms the foundation of this mindset. It’s about cultivating habits that reduce ambiguity, clarify intent and preserve institutional memory.” 

For instance, he said, take the period leading up to the contract. The pre-contractual phase is too often overlooked, but this stage contains the DNA of the deal. “Anticipative counsel should make it standard practice to track discussions and document key positions. Doing so creates a bridge between the spirit of the negotiation and the eventual implementation of the agreement. It also ensures that future stakeholders – those not present during the deal-making – can understand not just what was agreed, but why it was agreed,” said Troussel.  

Another simple yet powerful practice is to equip those tasked with executing the agreement – often individuals who have not been at the table when the contract was negotiated – with a clear summary of the obligations and their timetable. “These small acts of discipline go a long way toward ensuring the contract doesn’t gather dust in a drawer but becomes a living guide. While these exercises may seem redundant or time-consuming, I’d argue the opposite: with today’s AI tools able to assist in notetaking and documentation, this kind of hygiene has never been easier, or more essential. Of course, respecting confidentiality and privilege,” he said. 

In terms of artificial intelligence, Troussel said that for licensors managing a growing portfolio of agreements, the right contract management platform brings order to the chaos. This helps ensure coherence, preserves logic across agreements and reduces the risk of avoidable disputes. In today’s landscape, adopting such tools isn’t just smart – it’s fast becoming indispensable. 

For John Lee, a partner at Gilbert + Tobin in Sydney, a clear dispute resolution clause is a key provision to include in tech and IP licensing agreements which may mitigate the risk of or prevent disputes arising.  

“Any dispute resolution clause ought to reflect each company’s priorities and the ongoing business relationship,” he said. “Companies should include a requirement that senior executives (such as the CEO of each company) discuss the resolution of any dispute to salvage the ongoing business relationship. As an alternative to the resolution of disputes before a court, companies should consider mediation or arbitration clauses, particularly for international entities. As mediation or arbitration can become more costly than court proceedings, the outcome must be binding on the parties. Otherwise, mediation or arbitration may not serve a useful purpose.” 

“Further, companies should also consider a jurisdiction clause in the agreement with a matching governing law clause,” he added. “While an exclusive jurisdiction clause may have some benefits of certainty, it requires the companies agreeing to these clauses to know and understand the law of exclusive jurisdiction. Of note, exclusive jurisdiction clauses are not always binding worldwide. Contrary to this, non-exclusive jurisdiction clauses retain greater flexibility for companies.” 

Term sheet and other means  

In minimizing disputes, Bienvenido Marquez III, a partner at Quisumbing Torres in Manila, said that licensors usually prepare the initial draft of the agreement by the nature of licensing agreements.  

“This sets the entire tone of licensing negotiations, and the initial draft can already include reasonable provisions in the first instance that otherwise might have to be bargained for later,” he said. “Moreover, while there are always at least two parties in licensing negotiations – the licensor and the licensee – these parties are by no means competitors. In fact, they are would-be partners, and as the licensor would, ultimately, only receive significant royalties if a product is successful in the marketplace. Therefore, a collaborative relationship is key, and this should set the tone of any licensing negotiations.” 

One tool which parties can use to effectively minimize the risk of future disputes is a term sheet, Marquez said. “A term sheet is a non-binding document outlining the parties’ key terms and conditions of any potential business agreement. If the parties are able to agree on their key terms and conditions at this stage, drafting and agreeing on the licence agreement would not be too difficult later.” 

There are also several terms which are the usual subject of disputes, and that parties should therefore have a clear agreement at the onset. Some of these include: 

• Grant of rights. The parties should be clear about what is being licensed. The grant of rights determines the scope of the licensing agreement; in case of conflict between the parties, the grant of rights serves as an integral reference point. For example, are new IP rights deemed added automatically, or should the scope of the agreement be amended from time to time? Moreover, who owns improvements on the “foreground IP” resulting from the agreement? These should be clearly laid out in the agreement to minimize disputes. 

• Definition of terms. Key terms should be clarified and agreed upon to avoid business conflict later on. As such, the parties should pay particular attention to the agreement’s definition of terms. How are “foreground IP” and “background IP” defined? What is the term of the agreement? What is the definition of “confidential information”?  

• Exclusivity. The parties should clearly agree on whether the licence of the agreement is exclusive or non-exclusive, as well as the territorial scope. A common mistake here is the use of “sole and exclusive.” This should be avoided as “sole” and “exclusive” are not entirely the same concept. In an “exclusive” licence, only the licensee can exploit the rights in the specified territory. On the other hand, in a “sole” licence, the licensor can still exploit the rights themselves but cannot grant licences to others. 

• Term. How long does the licence last? Is the licence renewable? If yes, at whose discretion? On what conditions? Does it renew automatically? These are important considerations which must be clearly reflected in the agreement. 

• Confidentiality. In most licensing agreements, it would be inevitable for the parties to disclose confidential information or trade secrets with each other. As such, parties should be required to recognize that information received is confidential and proprietary. The parties must define the term as clearly as possible, identify limited instances of authorized disclosure, and outline the obligations of the party receiving the confidential information. 

• Non-compete. In exclusive licensing arrangements, a non-compete clause provides added protection for the licensor. The scope of the non-compete – including its term or duration – must also be agreed upon. 

• Dispute resolution. Of course, in some cases, disputes may be inevitable. In anticipation of this, the parties should already agree on a clear dispute resolution clause, which outlines the parties’ process for mediation (if any), preferred venue, mode of dispute resolution, and governing law. “In our experience, it is best practice in licence agreements for parties to have a robust arbitration clause, as arbitration generally helps reduce the risk of costly and prolonged disputes,” said Marquez.  

Marquez added: “Finally, there is the issue of technology transfer arrangements, or TTAs, under the Philippines’ Intellectual Property Code, which contracting parties must deal with as well. Under the IP Code, IP licensing agreements, which involve the transfer of systematic knowledge, or know-how, are considered TTAs. This has far-reaching effects, as there are a number of mandatory clauses and prohibited clauses for TTAs – most of which favour the licensee – which must be complied with. Non-compliance with any of these requirements may render the entire agreement unenforceable, as provided under the IP Code.”   

“Therefore, the parties must determine early on whether the agreement would involve the transfer of know-how. If yes, the parties should consider the IP Code’s mandatory and prohibited clauses in drafting the agreement. In case of doubt, the parties may consult the Documentation, Information, and Technology Transfer Bureau of the Philippines’ IP office,” Marquez said.  

Felicisimo Agas III, a senior associate at the same firm, said that due diligence is also very important. Failure to conduct meticulous due diligence before entering into a licensing agreement may result in disastrous effects to both the licensor and the licensee. 

“On the part of the part of the licensor, the latter should ensure that the licensee is sufficiently competent in terms of size, resources and experience to effectively commercialize and exploit IP in the territory,” he said. “On the other hand, on the licensor, the licence should of course ensure that the IP rights to be licensed are valid and have sufficient ‘life’ to cover the whole term of the intended business arrangement. Moreover, the licensee should make sure that the licensor has the right to license such IP rights.” 

He added: “Conducting due diligence on these matters becomes even more crucial in cross-border arrangements, as there are additional factors – cultural, political and legal, among others – for the licensor to consider. Ultimately, the licensor should make sure that the licensee will be able to effectively exploit the IP in the relevant territory. Meanwhile, the licensee should be sure that the licensor has the right to license and exploit the IP in said territory.” 

Relationships and partnerships 

Still at the heart of any successful licensing relationship lies a clear paradox: the more clearly intellectual property is defined and protected, the more open and collaborative the relationship can become.  

 “Without IP, there is no foundation for partnership – no common asset around which mutual value can be built,” said Troussel. “Precisely by protecting IP, both parties are empowered to engage in meaningful, long-term collaboration. In fact, the stronger the IP position, the more intimate and trusting the relationship tends to be. Based on my personal experiences, a few essential principles continuously emerge.” 

First, a strong collaborative relationship requires a clear understanding of the interests, goals and constraints of contract partners. “This cannot be assumed; it must be cultivated through dialogue, transparency and regular interaction. In other words: the licensee and licensor should preferably be close allies rather than distant parties. Ultimately, the licensee-licensor relationship should be approached with the same seriousness, depth and ongoing commitment as a strategic alliance. On-the-ground collaboration, not just legal compliance, is what breathes life into the deal,” he said. 

Second, confidentiality, while essential, has no magical recipe. Troussel said that this is not just about non-disclosure agreements – it's about trust built over time, with safeguards that are specific, proportional and regularly re-assessed.  

“Such re-assessment must however not be limited to confidentiality regimes. It applies to every aspect of a licence agreement. Licence agreements are anything but static, nor a one-off transaction. On the contrary, it is among the most dynamic and collaborative of commercial agreements. It evolves as technologies shift, markets respond and strategies adapt. Regular check-ins to assess whether objectives are being met – both from a performance, relational, confidentiality standpoint – are not optional; they are indispensable,” he said.  

“Whereas the concept of ‘agility’ has passed its buzz-word peak, its relevance is here to stay,” Troussel added. “In the context of licence agreements, agility implies that a balance must be struck between being precise in what is agreed upon and being flexible enough to accommodate change. Built-in re-assessment mechanisms, milestone reviews or renegotiation triggers help ensure that the agreement serves both parties not just at signing, but throughout its life. Static contracts often breed friction, while adaptive ones enable sustainable partnerships.” 

For Lee, an important step to maintain a strong collaborative business relationship is to set up the business in the jurisdiction where the rights are licensed. “While this involves cost, it allows the rights holder and the licensee to work closely and collaboratively, as the rights holder is more involved in the business of the licensee,” he said.  

In addition, a well-drafted, clear and comprehensive contract creates a better framework to maintain a business relationship. “This is particularly the case where contractual rights are real and enforced, as opposed to implemented and forgotten about. By way of example, the rights holder should exercise quality and assurance clauses and check the production facility of the licensee to ensure compliance. Rights to attend key business, strategy and planning meetings of the licensee should be exercised, and meetings attended, to ensure the rights holder is across issues as they arise and have a real influence in the direction of the business relationship,” he said. 

“Finally, the scope of any grant of rights ought to be appropriate to the circumstances. For example, if a licensee is manufacturing and selling products in Australia only, a global licence is unnecessary and potentially an issue in the future,” he added.