Sole License Template for Indonesia
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What is a Sole License?
This Sole License agreement template is designed for use in the Indonesian legal context when a rights holder wishes to grant exclusive licensing rights to a single party while retaining their own right to use the intellectual property. The document is particularly relevant when parties seek to establish a strong market position in Indonesia while ensuring compliance with local regulations, including mandatory registration requirements with the Directorate General of Intellectual Property. The Sole License structure is commonly used for valuable intellectual property where controlled exploitation is crucial, but the owner wishes to maintain some usage rights. The agreement includes comprehensive provisions for quality control, payment terms, and territory restrictions, all aligned with Indonesian legal requirements and business practices. It's essential for businesses entering the Indonesian market through licensing arrangements and requires careful consideration of local law provisions, including Law No. 13 of 2016 on Patents and related intellectual property regulations.
About the Sole License
A Sole License agreement establishes an exclusive licensing arrangement where you grant rights to use your intellectual property to only one licensee, while retaining your own right to continue using the IP. This arrangement differs from exclusive licensing because you maintain usage rights alongside the licensee, making it an attractive option for Indonesian businesses seeking controlled market expansion while preserving operational flexibility.
When do you need this document?
You need a Sole License agreement when entering strategic partnerships in Indonesia's competitive market landscape. This document is essential when you want to grant exclusive rights to a trusted partner for manufacturing, distribution, or technology implementation while maintaining your own operational capabilities. Indonesian businesses often use sole licensing for patent technologies, trademark usage, and software licensing where market control is crucial but complete exclusivity would limit the licensor's business opportunities. The arrangement is particularly valuable for international companies entering Indonesia through local partnerships, as it provides market exclusivity to the Indonesian partner while allowing the foreign company to maintain direct operations if needed.
Key legal considerations
Your sole license agreement must clearly define the scope of exclusivity and territorial limitations to avoid conflicts between your rights and the licensee's rights. Payment structures require careful attention, including upfront fees, royalty percentages, and milestone payments that comply with Indonesian foreign exchange regulations. Quality control provisions are essential to protect your intellectual property's value and reputation in the Indonesian market. The agreement should include detailed termination clauses covering breach scenarios, non-performance, and voluntary termination, ensuring you can reclaim full control when necessary. Anti-assignment clauses prevent the licensee from transferring rights without your consent, maintaining the personal nature of the licensing relationship.
Legal requirements in Indonesia
Under Indonesian law, your sole license agreement must comply with Law No. 13 of 2016 on Patents for patent-related licensing and Law No. 20 of 2016 on Trademarks for trademark licensing arrangements. Mandatory registration with the Directorate General of Intellectual Property is required for legal recognition and enforceability of the license agreement. The document must be executed in Indonesian language or accompanied by certified translations to ensure validity in local courts. Payment terms must comply with Bank Indonesia regulations regarding foreign exchange transactions and transfer pricing documentation. Government Regulation No. 36 of 2018 governs recording procedures and requires specific documentation for license agreement registration. Your agreement must also ensure compliance with Law No. 5 of 1999 (Anti-Monopoly Law) to prevent unfair business competition or market manipulation through licensing arrangements.
GOVERNING LAW
Applicable law
This Sole License is drafted to comply with Indonesia law. Key legislation includes:
Indonesian Civil Code (KUHPerdata): Provides the basic legal framework for contracts, including formation, validity, and enforcement of agreements
Law No. 20 of 2016 on Trademarks and Geographical Indications: Regulates trademark licensing and registration requirements for license agreements
Law No. 28 of 2014 on Copyright: Governs copyright protection and licensing, including exclusive licensing arrangements
Government Regulation No. 36 of 2018: Regulates the procedures for recording license agreements and requirements for legal recognition
Law No. 5 of 1999 (Anti-Monopoly Law): Ensures licensing agreements do not create unfair business competition or monopolistic practices
Law No. 25 of 2007 on Investment: Regulates foreign investment aspects of licensing agreements if involving international parties
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