Fast-paced technological advancements require the modification and adaptation of legal frameworks governing the relationships between market participants. If the law is not up to date with new ideas, innovations, and other expressions of human creativity protected by intellectual property rights, on top of the legal uncertainty and difficulties in resolving disputes, there will also be negative effects on economic development. In this text, I will give a brief overview of the legal regulation of license agreements in the Republic of North Macedonia.

Law on Obligations Act
According to the definition of a license agreement provided in the Law on Obligations Act, the licensor undertakes to assign to the licensee, in whole or in part, the right of use of a patent, technical know-how and experience, a trademark, sample, or model, whereas the licensee undertakes to pay a certain compensation. The compensation is usually in money, but it can also be agreed in the way of delivery of certain goods used by the licensee in connection with the license agreement. In case the contracting parties wish to conclude a license agreement without compensation, we advise them to designate a certain symbolic amount to fulfill the formalities provided by the law.
When drawing up a license agreement, certain mandatory rules provided by the Law on Obligations Act should be taken into account, such as:

  • written form;
  • limitation of the duration of a license for certain IP rights (it cannot be concluded for a period exceeding the duration of the legal protection of those rights);
  • exclusive or non-exclusive license (if the agreement does not specify the kind, it is considered to be non-exclusive);
  • territorial limitation of the license;
  • obligations of the licensor towards the licensee;
  • obligations of the licensee towards the licensor;
  • sublicense rules;
  • rules for termination of the contract.

Industrial Property Act
According to the Industrial Property Act, the applicant or the right holder of an industrial property right can license the use of such right. The agreement must be executed in written form, however, it does not have to be notarized (unlike agreements for the assignment of rights, where notarization of signatures is mandatory). For the agreement to have erga omnes effect, it must be recorded in the register of the State Office for Industrial Property, otherwise, it remains inter partes and the rights deriving therefrom cannot be enforced against third parties. Any provision that imposes restrictions on the licensee where such restriction is not derived from the right which is the subject of the agreement, or which is unnecessary for the preservation of that right, or contradicts the regulations on the restriction of competition, shall be deemed null and void. Finally, the Industrial Property Act provides that the provisions of the Law on Obligations Act will be equally applicable.

Copyright and Related Rights Act This Act does not mention the term “license” at all, but stipulates that the author may transfer material rights by inheritance, by written agreement (exclusively and non-exclusively), or in another written form (non-exclusively) with permission, statement, consent, and the like, to other persons. The agreement should contain, in particular, the type of rights that are transferred, their scope, exclusivity, the territory to which the transfer of rights refers, the duration of the transfer, and the royalties (determined according to the principle of fairness, the type of work, the type and the scope of the right of use being transferred, the duration, and other circumstances relevant for its use). It also stipulates that the provisions of the Law on Obligations Act are equally applicable to agreements relating to the transfer of material rights.

Conclusion
It can be concluded that, besides containing outdated definitions of industrial property rights, the Law on Obligations Act is also very restrictive as far as license agreements are concerned, and to a certain extent conflicts with the Copyright and Related Rights Act (“the Copyright Act”). Namely, the Law on Obligations Act does not address copyright and the potential for licensing material rights derived from it, whereas the Copyright Act allows for such a possibility by providing that certain material rights can be transferred by written agreement (exclusively and non-exclusively) or in another written form (non-exclusively) with permission, statement, consent, etc., In addition, the Copyright Act stipulates that the provisions of the Law on Obligations Act are equally applicable to agreements for the transfer of material rights.

The restrictiveness of the provisions in the Law on Obligations Act concerning license agreements can also be seen in relation to other intellectual property rights, such as breeders’ rights, where according to the Breeders’ Rights Act, the holder of the right can carry out sales or other types of trade with the propagating material of a protected variety.

Having in mind all of the above, it is more than necessary to make adaptations to the Law on Obligations Act insofar as license agreements are concerned. In particular, instead of enumerating the rights that can be licensed, they should be defined by the general term “intellectual property rights”, and it should be emphasized that the licensing of these rights should be in accordance with the lex specialis laws that regulate each right individually. In that way, apart from giving more freedom to market participants to contractually arrange relations regarding intellectual property rights, it will also avoid a clash of different interpretations of the current (outdated) provisions. While the world is preparing for new challenges in the field of intellectual property arising from the rapid development of artificial intelligence, the legislation and practice in the Republic of North Macedonia must join those trends as soon as possible.