Licensing Agreement in Nigeria: Renting Out What You Own
A licensing agreement lets somebody use your intellectual property without owning it. You keep the trademark, the software, the patent or the copyright, and they get a defined right to use it on defined terms for a defined period.
Done well it is the most profitable thing an owner of intellectual property can do. Done carelessly it is how brands lose control of their own name.
Licence or Assignment
Get this straight before anything else. An assignment transfers ownership permanently. A licence grants permission while ownership stays with you.
People sign documents titled licence that read like assignments, usually because the grant clause is loose and there is no end date. If you intend to keep the asset, the agreement must say the licensor retains all right, title and interest, and that all rights not expressly granted are reserved.
Under the Copyright Act 2022 an assignment and an exclusive licence must be in writing to be effective. A non-exclusive licence can arise more informally, which is a reason to put even the informal arrangements on paper.
Defining the Grant Precisely
The grant clause is the agreement. Five variables define it and each one needs a decision.
What exactly is licensed. Identify the asset: the trademark by its registration number at the Trademarks Registry, the software by version, the patent by its number, the work by its title.
Exclusive, sole or non-exclusive. Exclusive means even you cannot use it in that field. Sole means you may, but no other licensee. Non-exclusive means you can license the same thing to ten others. The price should differ sharply between them.
Territory. Nigeria only, West Africa, worldwide. Do not grant worldwide rights to a licensee who can only service Lagos.
Field of use. A clothing brand licensed for footwear is not licensed for cosmetics. Narrow fields let you license the same mark several times over.
Term. Fixed years, with renewal on stated conditions. Perpetual licences are assignments with better manners.
Royalties and Getting Paid
The usual structures are a running royalty on net sales, a fixed periodic fee, a one off lump sum, or a combination with an upfront payment against future royalties.
If you take a percentage, define the base. "Net sales" must be defined in the agreement: gross invoiced amounts less what, exactly. Returns and VAT are fair deductions. Marketing costs and the licensee's overheads are not, and a licensee who drafts the definition will try.
Add a minimum annual royalty. Without one, an exclusive licensee can sit on your rights, sell nothing, and block you from the market for years. The minimum is what forces them to perform or give the licence back.
And take audit rights: the licensee keeps proper records, you may inspect them on notice, and they pay your audit costs if the shortfall exceeds a stated percentage.
NOTAP, Which Foreign Licensors Forget
This is the Nigerian specific point that catches people. Where a Nigerian company is licensing technology, a trademark, a patent or know how from a foreign licensor, the agreement generally has to be registered with the National Office for Technology Acquisition and Promotion.
The registration window is short, sixty days from execution, and NOTAP reviews the commercial terms, including whether the royalty rate is within the ranges it accepts.
The consequence of not registering is practical rather than theoretical. Without a NOTAP certificate, the Nigerian licensee cannot remit royalties abroad through the official foreign exchange market. The licence may still be valid between the parties, but the money cannot legitimately leave the country. Any cross border licence involving Nigeria should be structured with this in mind from the start, not discovered at the first payment.
Quality Control and Protecting the Brand
For a trademark licence this clause is not optional. If a licensee puts your mark on inferior goods, the damage is to your brand and, over time, to the validity of the registration itself.
So reserve the right to approve products, packaging and marketing before use, set quality standards, allow inspection of premises, and require the licensee to use the mark in the correct form with the correct notices. Add a right to terminate quickly for a quality breach that is not fixed.
Also say who enforces against infringers, who pays for it, and who keeps any damages recovered. Silence on this means nobody acts.
Frequently Asked Questions About Licensing Agreements in Nigeria
What is the difference between a licence and an assignment? A licence is permission to use while you keep ownership. An assignment transfers ownership outright. Under the Copyright Act 2022 both an assignment and an exclusive licence must be in writing.
Does my licensing agreement need to be registered in Nigeria? A trademark licence can be recorded at the Trademarks Registry, and a technology transfer licence from a foreign licensor to a Nigerian company generally must be registered with NOTAP within sixty days. Without the NOTAP certificate, royalties cannot be remitted abroad through official channels.
Should I grant an exclusive licence? Only for a price, a territory and a term that justify it, and never without minimum performance obligations. An exclusive licensee who does nothing locks you out of your own market.
How much royalty should I charge? It depends on the sector, the strength of the brand and what the licensee has to invest. Where NOTAP registration applies, the rate also has to fall within the ranges NOTAP will accept, so check that before agreeing a figure.
Can the licensee sublicense? Only if you allow it. Say so expressly, and if you do allow it, require your prior written consent and make the licensee responsible for its sublicensees' breaches.
Getting Your Licensing Agreement Right
Read next: how to register a trademark, patent or design, since you can only license what you own. For a whole business system rather than one asset, see the franchise agreement.
A licence stands or falls on the grant clause, the royalty definition and the quality control. Get those three precise and the rest is administration.
Answer a few questions and you will have a licensing agreement written for Nigerian use, ready to download in Word and PDF.