1) What an IP license is (and why it matters)

An intellectual property (IP) license agreement is a contract where an IP owner (the licensor) grants another party (the licensee) permission to use specified IP, under defined conditions, without transferring ownership (unless the agreement is actually an assignment). In the Philippine setting, IP licensing sits at the intersection of:

the Intellectual Property Code of the Philippines (RA 8293, as amended) (for patents, trademarks, copyrights, and related rights),
the Civil Code (contracts, obligations, damages),
the Consumer Act, competition principles and public policy (for unfair restraints),
sector-specific regulation (e.g., technology transfer arrangements and regulated industries),
and—when foreign entities are involved—foreign exchange and tax considerations.

Licenses are commercially critical because they allocate: (a) scope of use, (b) quality and reputational control, (c) ownership of improvements, (d) liability for infringement, and (e) tax and withholding compliance.

2) Core Philippine legal framework affecting IP licenses

2.1 General contract principles (Civil Code)

IP licenses are contracts. As a baseline, a license must satisfy:

consent of parties,
a certain object (the licensed IP and the permitted acts),
a cause/consideration (royalties, lump sum, cross-license, services, etc.).

Contracts are generally enforceable as written, but Philippine law recognizes limits where terms violate law, morals, good customs, public order, or public policy.

2.2 Intellectual Property Code (RA 8293, as amended)

The IP Code governs validity, registrability, enforcement, and certain licensing rules per IP type (patents, trademarks, copyrights) and includes special regulation of technology transfer arrangements (TTAs). This is the biggest “requirements” source for drafting and enforceability in the Philippines.

2.3 Special regulation of Technology Transfer Arrangements (TTAs)

A large subset of IP licenses—particularly those involving patents, utility models, industrial designs, know-how, and certain technical assistance or franchising-like arrangements—may qualify as a technology transfer arrangement. TTAs are regulated because certain terms are considered anti-competitive or contrary to public interest.

In practice, if the license involves the transfer/permission to use a technology (not merely a brand or purely artistic copyright), it may be treated as a TTA and subject to mandatory and prohibited provisions and, in some cases, registration/recordal requirements with the relevant IP office unit that handles TTAs (often associated with the Documentation, Information and Technology Transfer Bureau functions).

3) What must be in an IP license agreement (Philippine drafting essentials)

There is no single universal template mandated by statute for all IP licenses, but Philippine enforceability and operational needs strongly point to the following as “must-have” provisions.

3.1 Identify the parties correctly

Include:

full legal names,
citizenship/nationality and principal place of business,
registration details for corporations/partnerships,
authorized signatories and authority basis (board resolution, secretary’s certificate, SPA if applicable).

3.2 Precisely identify the IP being licensed

This is the number one failure point in disputes.

Patents / Utility Models / Industrial Designs

registration/application number,
title, filing and grant dates,
jurisdictions covered (Philippines vs other countries),
status (granted/pending/expired), maintenance fees responsibility.

Trademarks

mark depiction/word mark,
registration/application number,
class(es) and specification of goods/services,
whether the license covers variations/logo lockups,
territory (Philippines only or wider),
status (registered/pending).

Copyright

work title, author, date/version,
whether rights include reproduction, distribution, public communication, adaptation, etc.,
whether source files are included,
whether it includes future versions/updates.

Trade secrets / Know-how

define the confidential subject matter by category,
identify documentation, processes, formulas, training, manuals,
define exclusions (public domain, independently developed, etc.).

3.3 Define the scope of the license grant

A valid license needs clear limits:

exclusive / non-exclusive / sole
sublicensing permitted or prohibited, with conditions
assignability (licensee’s right to transfer)
field of use (e.g., “only for pharmaceutical products”)
territory (Philippines, ASEAN, global)
channels (online-only, retail-only)
permitted acts (make, use, sell, import; reproduce, adapt, distribute; display; etc.)
term (fixed period; tied to IP validity; renewable; termination triggers)

3.4 Consideration and payment terms

Common structures in the Philippines:

running royalties (percentage of net sales),
minimum annual royalty,
milestone fees,
lump sum,
cross-license value,
free license (still requires careful drafting for consideration/purpose).

Include:

currency,
payment schedule,
audit rights,
late payment interest,
tax gross-up clauses if withholding applies.

3.5 Quality control (especially for trademarks and franchises)

For trademarks, quality control is essential to avoid consumer deception and dilution risks. Include:

quality standards,
approval of specimens, packaging, advertising,
inspection/audit rights,
corrective action plan,
consequences of non-compliance.

In Philippine practice, trademark licensing is often intertwined with distributorship/franchise models; quality control provisions are critical to maintain brand integrity and reduce “naked licensing” arguments.

3.6 Ownership, improvements, and derivative works

Specify:

licensor retains ownership of underlying IP,
ownership of improvements (licensee improvements: assigned to licensor? jointly owned? license-back?),
who owns derivative works and customizations,
obligation to disclose improvements,
filing responsibility for improvements (patent applications).

3.7 Infringement, enforcement, and defense

Address:

who monitors infringement,
who has standing to sue (often licensor; sometimes licensee with conditions),
cooperation duties,
allocation of litigation costs and recoveries,
indemnities for third-party claims,
procedures if licensee is sued for infringement.

3.8 Confidentiality and trade secret protection

For trade secrets/know-how:

strong confidentiality obligations,
restricted access and security measures,
return/destruction of materials upon termination,
injunctive relief language,
survival of obligations post-termination.

3.9 Compliance with law and public policy

Include representations that:

licensor owns/controls the IP,
rights are not encumbered (or disclose encumbrances),
both parties comply with applicable law (data protection, consumer protection, labeling, regulated products).

3.10 Termination and post-termination obligations

At minimum:

termination for breach, insolvency, non-payment,
cure periods,
immediate termination triggers (e.g., brand misuse, confidentiality breach),
post-termination sell-off periods (common in trademark/product contexts),
destruction/return of confidential materials,
continued payment obligations for accrued royalties,
survival clauses.

3.11 Governing law and dispute resolution

For Philippine context, parties often choose:

Philippine law and venue/arbitration in the Philippines, or
arbitration (PHIAC or ICC) with seat in Manila/Singapore/HK.

If foreign parties are involved, choice-of-law is possible, but Philippine mandatory rules (including TTA constraints and public policy) can still bite, particularly where the license is implemented in the Philippines or affects Philippine markets.

4) Formalities: writing, notarization, and recordal/registration

4.1 Written form

Many IP licenses are enforceable even if not notarized, but written form is strongly advised for certainty, evidence, and compliance with IP office recordal systems. For some arrangements (particularly TTAs), compliance is practically impossible without a written agreement.

4.2 Notarization

Notarization is not universally required for validity of every IP license, but it is often used to:

provide evidentiary weight,
support recordal,
facilitate enforcement.

If the signatories are abroad, consularization/apostille requirements may be relevant depending on the document’s origin and use.

4.3 Recordal/registration with the Intellectual Property Office of the Philippines (IPOPHL)

Recordal (sometimes loosely called “registration”) can be important for:

enforceability against third parties,
evidentiary presumptions,
establishing the licensee’s recognized interest.

Patent licensing in particular often benefits from recordal, and Philippine practice has long treated recordal as important to bind third parties. For trademark licenses, recordal is commonly pursued to place the public on notice and help in enforcement and administrative actions. For copyright, the regime is different because copyright exists upon creation; recordal may still be useful (e.g., for evidence), but licensing is fundamentally contractual.

Where the agreement qualifies as a technology transfer arrangement, there may be documentation and evaluation/recordal processes to ensure compliance with mandatory/prohibited clauses.

5) Technology Transfer Arrangements (TTAs): the compliance “requirements” that can invalidate terms

TTAs are the most uniquely Philippine “requirements” area. If the license is a TTA, the agreement must be drafted to avoid prohibited clauses and include mandatory provisions, otherwise the problematic terms may be unenforceable and the agreement may be refused recordal or require adjustment.

5.1 Common prohibited or high-risk restrictions in TTAs (practical drafting warnings)

While each case depends on the exact statutory wording and IPOPHL evaluation practice, the following categories are frequently treated as problematic in TTA review:

Price fixing / resale price maintenance requirements imposed by licensor.
Restrictions on exporting licensed products where not justified.
Full grant-back of improvements without reasonable basis (depending on breadth).
Prohibitions on using competing technologies beyond what is necessary to protect legitimate interests.
Tying (forcing purchase of unrelated products/services as a condition of the license).
Unreasonable post-termination non-competes that restrain trade.
Restrictions on research and development that are not necessary.
Clauses that prevent the licensee from challenging validity of the licensed IP (often scrutinized).
Automatic assignment of improvements without compensation or beyond the licensed field (often scrutinized).
Excessively long terms not linked to IP life or legitimate investment recovery.

These issues overlap with competition policy and public interest considerations. Even if parties agree, certain restraints can be void or unenforceable in the Philippines.

5.2 Mandatory provisions commonly required in TTAs (practical “must include” set)

Again, the details depend on classification and review, but TTAs often require provisions covering:

access to improvements and technical information needed for effective use,
continued supply of spare parts/technical assistance when promised,
training/assistance scope if part of the package,
dispute settlement mechanisms,
applicable law and venue terms consistent with Philippine policy,
clear royalty calculation and basis.

In drafting, it is best to assume TTA scrutiny if the license touches patents/know-how and has restrictive commercial terms, and then structure clauses to be defensible as reasonable and necessary.

5.3 When you need prior approval or special clearance

Some TTAs and similar arrangements may be eligible for exemptions or special treatment, but these are not “automatic.” If your deal has heavy restrictions but the parties want enforceability, the Philippine approach is to align with the regulated clause set rather than rely on litigation risk.

6) Requirements by IP type (Philippine-specific issues)

6.1 Patent licenses (and similar: utility models, industrial designs)

Key “requirements” and practice points:

Define whether the license covers making, using, selling, offering for sale, importing.
Clarify responsibility for maintenance/annuity fees and prosecution (if pending).
Address improvements and patent marking (if any).
Consider recordal for third-party effect and enforcement coordination.
If the license includes know-how, it may be treated as a TTA and reviewed accordingly.

6.2 Trademark licenses

Main Philippine concerns:

Quality control is essential.
Specify usage rules (exact marks, colors, placement, packaging).
Decide who files and pays for renewals and defenses against oppositions/cancellations.
Provide for immediate cease of use upon termination and sell-off rules.
Recordal is often pursued to strengthen enforceability and public notice.

6.3 Copyright licenses (software, content, media, designs)

Philippine copyright is broad and arises automatically, but licensing should be explicit on:

the exclusive economic rights being licensed (reproduction, adaptation, distribution, communication to the public, etc.),
whether the license is perpetual or term-limited,
whether updates/patches are included,
whether the license includes source code and development materials,
moral rights considerations (attribution, integrity) where relevant.

For software, license terms should also cover:

seat/user limits,
deployment environment,
reverse engineering restrictions (balanced against law and interoperability),
escrow (optional),
open-source components and compliance.

6.4 Trade secrets / know-how licenses

Trade secret protection in practice depends on:

clear definition of confidential information,
demonstrable reasonable measures to keep it secret,
contractual controls plus operational controls.

Philippine disputes often turn on whether the information was truly confidential and protected with reasonable measures, so your agreement should require:

limited access, logging, security controls,
employee/contractor NDAs,
return/destruction, no retention,
injunctive relief and liquidated damages (where enforceable).

7) Tax and payment compliance (Philippine realities)

Licensing frequently triggers withholding tax obligations when royalties are paid—especially if the licensor is non-resident. Agreements should allocate:

who shoulders withholding,
documentation for treaty relief (if applicable),
gross-up clauses,
invoice and official receipt mechanics.

Also consider:

VAT implications depending on classification and seller status,
transfer pricing if related parties are involved,
documentation for deductibility.

(Actual rates and treaty outcomes are fact-specific and should be handled with a Philippine tax professional for the transaction.)

8) Cross-border licensing: foreign licensors and Philippine licensees

8.1 Choice of law vs mandatory Philippine rules

Parties may choose foreign law, but if the license is performed in the Philippines, Philippine mandatory provisions (including TTA-related restrictions and public policy) can still affect enforceability.

8.2 Language, execution, and evidence

Ensure:

consistent signatory authority proof,
apostille/consular compliance for foreign signatures if the document is used in Philippine proceedings,
clear identification of foreign entity details.

8.3 Currency and remittance

Royalty remittances may require bank documentation, and supporting papers are often needed for withholding/treaty relief and audit defense.

9) Common pitfalls that break enforceability or commercial value

Vague IP description (no registration numbers, unclear scope).
No quality control in trademark licensing.
Overbroad restrictions that are vulnerable under TTA/public policy scrutiny.
No clear sublicensing rules, leading to uncontrolled downstream use.
No improvement/derivative ownership plan, causing later ownership disputes.
Royalty base ambiguity (gross vs net sales; deductions; refunds; intercompany sales).
No audit rights, making underreporting hard to detect.
Termination without transition rules, causing inventory and customer support chaos.
No enforcement plan, leaving infringement unmanaged.
Tax clause omissions, leading to surprise withholding exposure and disputes.

10) Practical “requirements checklist” for Philippine IP licenses

A. Always include

Parties, authority, definitions
IP identification and status
Grant clause: exclusivity, scope, territory, term, field of use
Royalties/fees, reporting, audit
Quality control (trademarks)
Confidentiality (especially for know-how)
Ownership, improvements, derivatives
Infringement handling, indemnities
Termination and post-termination obligations
Governing law and dispute mechanism

B. Add if likely a Technology Transfer Arrangement

Draft to avoid prohibited restraints
Include mandatory provisions addressing technology use, improvements, assistance, and fair commercial terms
Prepare for recordal/evaluation documentation

C. Operational add-ons that matter in the Philippines

Notarization (often practical)
Recordal strategy with IPOPHL for third-party effect/evidence
Tax withholding and treaty documentation
Regulatory compliance clauses if product is regulated (food, pharma, telecoms, etc.)

11) Relationship to franchising, distributorship, and brand deals

In the Philippines, many “licenses” are embedded in broader commercial relationships:

A franchise often includes trademark license + know-how + operational controls and looks like a TTA.
A distributorship may include limited trademark use and marketing permissions; quality control still matters.
A manufacturing license often includes patents, designs, and trade secrets and is the most likely to trigger TTA scrutiny.

Your contract should clearly separate:

IP rights (license),
supply terms,
marketing obligations,
support and training,
territorial exclusivity.

This helps enforceability and prevents a court or regulator from recharacterizing the arrangement in a way that undermines key terms.

12) Remedies and enforcement (Philippine angle)

In disputes, common remedies include:

injunction (especially for trademark misuse and trade secret leaks),
damages (actual, and sometimes liquidated damages if reasonable),
accounting of profits in some IP contexts,
termination and recall/cease-and-desist obligations,
administrative actions (e.g., trademark-related proceedings) depending on the scenario.

A well-drafted agreement improves enforceability by:

making scope and breach clear,
providing evidence-ready documentation,
aligning restrictions with Philippine policy (especially for TTAs),
and ensuring quality control and confidentiality measures are demonstrable.