Unilateral withdrawal from a license agreement

Abstract

Keywords: license agreement, unilateral withdrawal from an agreement, copyright,intellectual property
 The right to the unilateral withdrawal of a license agreement is formulated in Part 2 of Article 1110 ofthe Civil Code of Ukraine in a generalized form, leaving outside the legal regulation anumber of important issues that are significant for the effective application of this provision.In particular, what should be the duration of the delay in the term of beginning theuse of the object of intellectual property rights, whether the licensor should provide thelicensee with an additional term to start using this object, what is the nature of the violationof the terms of the license agreement that allows for a unilateral withdrawal from it,in what form such a withdrawal should be made and from what moment it can be consideredcommitted. These aspects remain almost unexplored which determines the relevanceof their scientific and practical analysis. The purpose of the article is to provide acomprehensive characterization of the right to unilateral withdrawal from a licenseagreement and the mechanism for its implementation on the example of copyright, takinginto account the provisions of the legislation of the EU Member States.Unilateral withdrawal from the license agreement is an extrajudicial procedurewhich is carried out by written notice of the interested party to the other party. Unlikethe laws of many EU member states, the Ukrainian legislation does not specify the durationof the delay in the use of the work by the licensee and does not establish the obligationto grant the licensee an additional term to start using the work, and therefore theparties may regulate these aspects at their own discretion. The absence in the licenseagreement of date or period within which the licensee must start using the work givesthe licensee the right to independently determine the moment of the work’s use and deprivesthe licensor of the opportunity to withdraw from the license agreement on thisbasis. It is substantiated that breach of contract may relate exclusively to the obligationsof a party under a license agreement but not to its rights since the law does not providefor the compulsory exercise of the right to use a work.Based on the experience of the EU Member States, it will be useful for Ukraine to providein Part 2 of Article 1110 of the Civil Code that the general prerequisite for the rightto unilateral withdrawal is the proper and timely performance by the party committingthe withdrawal of its obligations which determine the possibility of performance of theagreement by the other party. This will contribute to the stability of contractual relationsin this area and will prevent potential abuses, in particular, the exercise of the right tounilateral withdrawal from the license agreement in order to harm the interests of theother party. Also, in Part 2 of Article 1110 of the Civil Code, it is advisable to establishthat a unilateral withdrawal from a license agreement shall be made in writing and shallbe deemed to be made from the moment a party receives notice of the other party’s withdrawalfrom the agreement unless a later term is specified in the agreement or notice.This will properly clarify the unilateral withdrawal procedure and facilitate its more effectiveapplication in practice.