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Licensing Agreement (Canada)

Licensing Agreement

This Licensing Agreement (the "Agreement") is made and entered into as of [Effective Date] (the "Effective Date"), by and between the following parties:

[Licensor Name], with a principal address at [Licensor Address], [Licensor City], [Licensor Province] [Licensor Postal Code], Canada, email: [Licensor Email] (hereinafter referred to as the "Licensor"); and

[Licensee Name], with a principal address at [Licensee Address], [Licensee City], [Licensee Province] [Licensee Postal Code], Canada, email: [Licensee Email] (hereinafter referred to as the "Licensee").

The Licensor and the Licensee may each be referred to individually as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, the Licensor is the owner of certain intellectual property rights, specifically [Ip Type] rights, more particularly described as: [IP Description] (the "Licensed Property"); and

WHEREAS, the Licensee desires to obtain a licence to use the Licensed Property on the terms and conditions set forth herein; and

WHEREAS, the Licensor is willing to grant such licence subject to the terms and conditions contained in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. GRANT OF LICENCE

1.1 The Licensor hereby grants to the Licensee a [Licence Type] licence to use the Licensed Property within the territory of [Territory] for a period of [Licence Term], commencing on the Effective Date, subject to the terms and conditions of this Agreement.

1.2 The Licensee shall not use the Licensed Property outside the scope of the licence granted herein or in any manner that would diminish, tarnish, or otherwise harm the Licensed Property or the Licensor’s rights therein.

1.3 The Licensor reserves all rights not expressly granted to the Licensee under this Agreement.

2. COMPENSATION

2.1 In consideration of the licence granted herein, the Licensee shall pay to the Licensor the following:

(a) An upfront licensing fee of CAD $[Upfront Fee], payable upon execution of this Agreement.

(b) A continuing royalty at the rate of [Royalty Rate]% of net revenue derived from the Licensee’s use of the Licensed Property, payable [Payment Schedule].

2.2 All royalty payments shall be accompanied by a written statement detailing the calculation of net revenue and the royalty amount due for the applicable period.

2.3 All amounts payable under this Agreement are stated in Canadian dollars (CAD). Late payments shall bear interest at the lesser of: (a) two percent (2%) per month; or (b) the maximum rate permitted under section 347 of the Criminal Code (R.S.C. 1985, c. C-46).

2.4 The Licensor shall have the right, at its own expense and upon thirty (30) days written notice, to audit the books and records of the Licensee to verify the accuracy of royalty payments. Such audit shall be conducted during normal business hours and no more than once per calendar year.

3. TERM, RENEWAL, AND TERMINATION

3.1 This Agreement shall commence on the Effective Date and shall remain in effect for a period of [Licence Term], unless earlier terminated in accordance with the provisions of this section.

3.2 Upon expiration of the initial term, this Agreement [Renewal Terms].

3.3 Either Party may terminate this Agreement upon thirty (30) days prior written notice to the other Party in the event of a material breach of any provision of this Agreement, provided that such breach remains uncured at the expiration of the notice period.

3.4 Either Party may terminate this Agreement immediately upon written notice if the other Party: (a) becomes insolvent or makes an assignment for the benefit of creditors under the Bankruptcy and Insolvency Act (R.S.C. 1985, c. B-3); (b) has a receiver or trustee appointed for all or substantially all of its assets; or (c) is the subject of proceedings under the Companies’ Creditors Arrangement Act (R.S.C. 1985, c. C-36).

3.5 Upon termination or expiration of this Agreement, the Licensee shall immediately cease all use of the Licensed Property and shall return or destroy all materials containing the Licensed Property in the Licensee’s possession within fifteen (15) days of the effective date of termination. The Licensee shall provide written confirmation of such return or destruction.

4. INTELLECTUAL PROPERTY OWNERSHIP

4.1 The Licensee acknowledges and agrees that the Licensed Property, including all [Ip Type] rights therein, is and shall remain the sole and exclusive property of the Licensor. Nothing in this Agreement shall be construed as transferring any ownership rights in the Licensed Property to the Licensee.

4.2 Any goodwill arising from the Licensee’s use of the Licensed Property shall inure exclusively to the benefit of the Licensor.

4.3 Any improvements, modifications, or derivative works created by the Licensee based on the Licensed Property shall be the property of the Licensor, and the Licensee hereby assigns all right, title, and interest in such improvements to the Licensor.

5. COMPETITION ACT COMPLIANCE

5.1 The Parties acknowledge that certain licensing practices may be subject to the Competition Act (R.S.C. 1985, c. C-34), including but not limited to provisions concerning tied selling (section 77), exclusive dealing (section 77), and abuse of dominant position (sections 78-79).

5.2 Neither Party shall impose any licensing term or condition that would constitute a reviewable practice under the Competition Act. The Licensee shall not be required to acquire any additional product or service as a condition of this licence unless expressly agreed to by both Parties and permitted by applicable law.

6. REPRESENTATIONS AND WARRANTIES

6.1 The Licensor represents and warrants that: (a) the Licensor has the full right, power, and authority to enter into this Agreement and to grant the licence set forth herein; (b) the Licensed Property does not, to the best of the Licensor’s knowledge, infringe upon the intellectual property rights of any third party in Canada or in the territory; (c) there are no pending or threatened claims or proceedings against the Licensor with respect to the Licensed Property before any Canadian court or the Canadian Intellectual Property Office (CIPO); and (d) all registrations of the Licensed Property with CIPO or any other Canadian authority are current and in good standing.

6.2 The Licensee represents and warrants that: (a) the Licensee has the full right, power, and authority to enter into this Agreement; (b) the Licensee shall use the Licensed Property only in accordance with the terms of this Agreement and all applicable federal and provincial laws and regulations; and (c) the Licensee shall not take any action that would jeopardize, limit, or interfere with the Licensor’s ownership of the Licensed Property.

7. INDEMNIFICATION

7.1 Each Party shall indemnify, defend, and hold harmless the other Party and its officers, directors, employees, and agents from and against any and all claims, damages, losses, costs, and expenses (including reasonable legal fees on a solicitor-and-own-client basis) arising out of or relating to any breach of this Agreement by the indemnifying Party or any negligent or wilful misconduct of the indemnifying Party in connection with this Agreement.

7.2 The indemnified Party shall promptly notify the indemnifying Party in writing of any claim for which indemnification is sought and shall cooperate in the defence of such claim.

8. LIMITATION OF LIABILITY

8.1 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED ON CONTRACT, TORT, STRICT LIABILITY, OR ANY OTHER THEORY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

8.2 THE AGGREGATE LIABILITY OF EITHER PARTY UNDER THIS AGREEMENT SHALL NOT EXCEED THE TOTAL FEES AND ROYALTIES PAID OR PAYABLE BY THE LICENSEE TO THE LICENSOR DURING THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE EVENT GIVING RISE TO THE CLAIM.

9. CONFIDENTIALITY

9.1 Each Party agrees to maintain in strict confidence all proprietary and confidential information of the other Party obtained in connection with this Agreement and shall not disclose such information to any third party without the prior written consent of the disclosing Party, except as may be required by law or by order of a court or tribunal of competent jurisdiction.

9.2 This obligation of confidentiality shall survive the termination or expiration of this Agreement for a period of three (3) years.

10. NOTICES

10.1 All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed duly given when: (a) delivered personally; (b) sent by registered mail, postage prepaid, through Canada Post; (c) sent by nationally recognized courier service; or (d) sent by email with confirmation of receipt, to the addresses set forth above or to such other address as either Party may designate in writing.

10.2 Notices sent by registered mail shall be deemed received five (5) business days after the date of mailing.

11. DISPUTE RESOLUTION

11.1 Any dispute, controversy, or claim arising out of or relating to this Agreement shall be resolved by [Dispute Resolution].

11.2 The prevailing Party in any dispute shall be entitled to recover its reasonable legal costs from the other Party on a partial indemnity basis, or such other costs scale as the court or arbitrator may direct.

12. GOVERNING LAW

12.1 This Agreement shall be governed by and construed in accordance with the laws of the Province of [Governing Province] and the applicable federal laws of Canada. The Parties hereby attorn to the exclusive jurisdiction of the courts of the Province of [Governing Province].

12.2 To the extent that the Licensed Property is registered or protected under federal legislation, including but not limited to the Copyright Act, the Patent Act, the Trademarks Act, and the Industrial Design Act, such federal laws shall apply in addition to the laws of the governing province.

13. SEVERABILITY

13.1 If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and the remaining provisions shall continue in full force and effect. The invalid provision shall be modified to the minimum extent necessary to make it valid and enforceable while preserving the original intent of the Parties.

14. ENTIRE AGREEMENT

14.1 This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, understandings, representations, warranties, and agreements between the Parties, whether written or oral, relating to such subject matter.

14.2 This Agreement may not be amended, modified, or supplemented except by a written instrument executed by both Parties.

15. LANGUAGE

15.1 The Parties have expressly requested that this Agreement and all related documents be drawn up in the English language. Les parties ont expressément demandé que le présent accord et tous les documents connexes soient rédigés en langue anglaise.

IN WITNESS WHEREOF, the Parties have executed this Licensing Agreement as of the Effective Date first written above.

LICENSOR:

Name: [Licensor Signatory Name]

Title: [Licensor Signatory Title]

On behalf of: [Licensor Name]

LICENSEE:

Name: [Licensee Signatory Name]

Title: [Licensee Signatory Title]

On behalf of: [Licensee Name]

Party 1

________________

Signature

Date: ________________

Party 2

________________

Signature

Date: ________________

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What Is a Licensing Agreement (Canada)?

A Licensing Agreement in Canada grants a licensee the right to use the licensed asset on defined terms and sets the royalty or fee, governed primarily by common-law contract and intellectual-property principles.

Canadian intellectual property licensing is governed by several federal statutes. The Copyright Act (R.S.C. 1985, c. C-42) establishes the framework for licensing literary, artistic, dramatic, and musical works, as well as software. A distinctive feature of Canadian copyright law is the recognition of moral rights under s. 14.1 — the author's right of attribution and right of integrity. Moral rights cannot be assigned, only waived, so a licensing agreement must include a separate moral rights waiver clause if the licensor wants the licensee to modify or adapt the licensed work.

The Patent Act (R.S.C. 1985, c. P-4) governs the licensing of patented inventions, while the Trade-marks Act (R.S.C. 1985, c. T-13) addresses trademark licensing. Under s. 50 of the Trade-marks Act, a trademark owner must maintain control over the character and quality of goods or services associated with the mark, or risk abandonment. This means trademark licensing agreements in Canada must include quality control provisions — a requirement with no equivalent in copyright or patent licensing.

Royalty payments under licensing agreements are subject to GST/HST under Section 165 of the Excise Tax Act (R.S.C. 1985, c. E-15). When royalties are paid to non-resident licensors, a 25% withholding tax applies under Section 212 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Supp.)), unless reduced by an applicable tax treaty. The agreement should clearly allocate responsibility for these tax obligations.

The legal framework governing a Licensing Agreement in Canada draws on several key statutes. The Copyright Act (R.S.C. 1985, c. C-42) governs copyright licences, with Section 13 addressing ownership and Section 27 defining infringement. The Patent Act (R.S.C. 1985, c. P-4) governs patent licences under Section 55 and Section 65. The Trademarks Act (R.S.C. 1985, c. T-13) governs trademark licences under Section 50. The Competition Act (R.S.C. 1985, c. C-34) Section 79 addresses abuse of dominance through refusal to licence IP. The Canadian Intellectual Property Office (CIPO) — a branch of Innovation, Science and Economic Development Canada — administers IP registrations. The Federal Court of Canada has exclusive jurisdiction over IP matters under Section 20 of the Federal Courts Act (R.S.C. 1985, c. F-7). The Personal Information Protection and Electronic Documents Act (S.C. 2000, c. 5) Section 7 governs any personal data exchanged under the licence. The Canada Revenue Agency administers GST/HST compliance and NR4 withholding filings under Section 227 of the Income Tax Act.

When Do You Need a Licensing Agreement (Canada)?

When a software company wants to grant a client the right to use its proprietary software, specifying the number of users, permitted modifications, and whether the license is perpetual or subscription-based.

When an inventor or patent holder wants to commercialize a patented product or process by allowing a manufacturer to produce and sell it in exchange for royalty payments, without transferring ownership of the patent itself.

When a brand owner licenses its trademark to a franchisee, distributor, or manufacturing partner, and needs to maintain quality control to protect the mark's validity under the Trade-marks Act s. 50.

When an author, photographer, musician, or content creator licenses their work for commercial use — such as in advertising, publishing, or merchandise — and needs to define the scope, territory, and duration of permitted use while addressing moral rights under the Copyright Act.

When a university or research institution licenses a technology or patent developed by its researchers to a private company for commercial development, establishing milestone payments, diligence obligations, and reversion rights.

Without a written licensing agreement, the scope of the licence is undefined, leaving both parties vulnerable to infringement claims, loss of IP rights, and disputes over royalty calculations that can result in costly litigation before the Federal Court of Canada under Section 20 of the Federal Courts Act (R.S.C. 1985, c. F-7). The Federal Court has held in numerous decisions that implied licences are narrowly construed — only a written agreement clearly specifying the scope, territory, and duration provides reliable protection.

Parties in Canada should prepare a Licensing Agreement proactively. Where the licensed IP is registered, the licensor should confirm registration status with the Canadian Intellectual Property Office before executing the agreement. Exclusive licences covering patents should be registered under Section 50 of the Patent Act (R.S.C. 1985, c. P-4) to give third-party notice. For trademark licences, quality control provisions required by Section 50 of the Trademarks Act (R.S.C. 1985, c. T-13) must be implemented to prevent abandonment of the mark. Where the licence involves personal data — for example, user data shared under a software licence — compliance with Section 7 of the Personal Information Protection and Electronic Documents Act (S.C. 2000, c. 5) and provincial privacy legislation such as Quebec's Act 25 (Bill 64, S.Q. 2021, c. 25) is required. The Competition Act (R.S.C. 1985, c. C-34) Section 79 prohibits refusal to licence IP as an anti-competitive act where the licensor has market dominance, and the Competition Bureau may review exclusive or territorial licensing arrangements under Section 90 of that Act.

What to Include in Your Licensing Agreement (Canada)

Licensed Property Description — A precise identification of the intellectual property being licensed, including registration numbers (patent, trademark, copyright), version numbers for software, and any physical or digital deliverables. Vague descriptions create scope disputes.

License Type and Scope — Whether the license is exclusive (only the licensee may use the IP), non-exclusive (the licensor may grant additional licenses), or sole (only the licensee and licensor may use it). Specify the permitted territory, field of use, and any channel restrictions.

Royalty Structure — The compensation model: lump-sum payment, running royalties (percentage of sales or per-unit fee), minimum annual royalties, or a combination. Include the calculation method, reporting frequency, audit rights, and currency (CAD). Address GST/HST applicability and Part XIII withholding tax for non-resident licensors.

Moral Rights Waiver — Under the Copyright Act s. 14.1, moral rights belong to the author personally and cannot be assigned. If the licensee needs to modify, adapt, or use the work without attribution, a separate moral rights waiver must be obtained from the author. This is a uniquely Canadian requirement.

Quality Control (Trademarks) — For trademark licenses, the licensor must maintain control over the quality of goods or services bearing the mark, as required by Trade-marks Act s. 50. Failure to include and enforce quality control provisions can result in the mark being deemed abandoned.

Sublicensing Rights — Whether the licensee may sublicense the IP to third parties, and under what conditions. If sublicensing is permitted, the agreement should require the sublicense terms to be at least as restrictive as the primary license.

Term and Renewal — The license duration, renewal conditions, and whether the license is perpetual or terminates on a specific date. Include provisions for what happens to the licensee's inventory, ongoing contracts, and derivative works upon termination.

IP Protection and Enforcement — Obligations for both parties regarding the maintenance of IP registrations, infringement monitoring, and who has the right (and obligation) to enforce the IP against third-party infringers.

Termination and Reversion — Grounds for termination (breach, insolvency, failure to meet minimum royalties), cure periods, and post-termination treatment of products already in the distribution pipeline. Section 65 of the Patent Act (R.S.C. 1985, c. P-4) allows compulsory licences if an exclusive licence is used to abuse a dominant position under the Competition Act (R.S.C. 1985, c. C-34) Section 79.

Governing Law and Dispute Resolution — The agreement should specify the governing province and whether disputes go to the Federal Court of Canada (which has exclusive jurisdiction over IP matters under Section 20 of the Federal Courts Act), provincial Superior Courts for contract claims, or arbitration under ADR Institute of Canada rules. Related licensing documents — Distribution Agreement, Non-Disclosure Agreement, Software Development Agreement — are available at forms-legal.com. The forms-legal.com Licensing Agreement template covers mandatory Canadian requirements including the Section 50 quality control clause for trademarks, Section 14.1 moral rights waiver, and Section 212 withholding tax allocation.

Data Protection — When the licence involves sharing personal data (customer lists, user data, employee records), compliance with Section 7 of the Personal Information Protection and Electronic Documents Act (S.C. 2000, c. 5), administered by the Office of the Privacy Commissioner of Canada, is required. Quebec licensees must also comply with Act 25 (S.Q. 2021, c. 25), which amended the Act Respecting the Protection of Personal Information in the Private Sector (CQLR, c. P-39.1) to impose stricter consent and breach notification obligations under Section 3.1 of that Act.

Sources & Citations

Statutory citations link to official government sources.

  1. R.S.C. 1985, c. C-42CA official
  2. R.S.C. 1985, c. P-4CA official
  3. R.S.C. 1985, c. T-13CA official
  4. R.S.C. 1985, c. E-15CA official
  5. R.S.C. 1985, c. C-34CA official
  6. R.S.C. 1985, c. F-7CA official

Cite this page

Reference this free template in an article, syllabus, or research note:

APA

Forms Legal. (2026). Licensing Agreement (Canada) (Canada) [Legal document template]. Forms Legal. https://forms-legal.com/canada/business/contracts/licensing-agreement-canada

MLA

"Licensing Agreement (Canada) (Canada)." Forms Legal, 2026, https://forms-legal.com/canada/business/contracts/licensing-agreement-canada.

BibTeX
@misc{formslegal-licensing-agreement-canada,
  author       = {{Forms Legal}},
  title        = {Licensing Agreement (Canada) (Canada)},
  year         = {2026},
  howpublished = {\url{https://forms-legal.com/canada/business/contracts/licensing-agreement-canada}},
  note         = {Free legal document template. Based on Common law of contract and intellectual property}
}

Frequently Asked Questions

Based on Common law of contract and intellectual property — Template last modified June 2026

This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer

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