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License terms · Updated

Data Licensing Agreement: 10 Terms to Check Before You Sign

The clauses that decide what you're really giving, what you're paid and what happens to your data. Bring this list to your lawyer.

New to this? Start with the main guide on how to selling data to AI buyers, then use this page for the detail.

The short answer

A data licensing agreement defines what data is covered, what the buyer can do with it, for how long, whether it's exclusive, how it's anonymized, what's excluded, what you promise, how and when you're paid, and what happens to the data when the license ends. Payment terms and warranties are where sellers most often get surprised.

The 10 data licensing agreement terms to check

TermWhat to look for
1. ScopeExactly which systems, date ranges and data types are included
2. Field of useAI training and evaluation only, or broader
3. TermHow long the license runs, and whether it's perpetual
4. ExclusivityWhether you can license the same data to others
5. SublicensingWhether and how the buyer can pass it to AI labs
6. AnonymizationWho does it, the standard, and that it happens before third parties see it
7. ExclusionsClient-owned data, regulated data, HR and legal content
8. WarrantiesWhat you promise about ownership and rights, and the limits on that promise
9. PaymentAmount, milestones, and when money moves: signing, delivery or approval
10. Deletion and survivalWhat happens to the data and the buyer's rights when the license ends

Payment terms

Get the payment trigger in writing. Paid on delivery, paid after the buyer approves the data, and paid when the buyer resells it are very different deals. Net 30 to 60 days after approval is common with direct buyers. Watch for payment tied to a downstream sale you can't control.

Warranties and indemnity

You'll be asked to promise you own the data and have the right to license it. Keep that promise to what you actually know, cap your liability, and make sure the buyer is responsible for anonymization if they're doing it.

Exclusions to insist on

  • Data you hold on behalf of clients
  • Health, financial account and children's data
  • HR files, performance reviews and disciplinary threads
  • Privileged legal communications
  • Anything your customer contracts prohibit

Red flags

  • An assignment of all right, title and interest when you were told it's a license.
  • No anonymization obligation, or one that happens after third parties see the data.
  • Payment only if and when the buyer resells.
  • Unlimited warranties or indemnity.
  • Vague scope like "all company data".

See also licensing vs selling.

This guide is general information, not legal or tax advice. Talk to your attorney and CPA before you sign anything.

Next in this series: is selling data legal and how to anonymize data.

Common questions

What is a data licensing agreement?

A contract that gives a buyer defined rights to use your data for defined purposes and a defined term, in exchange for payment.

Should a data license be exclusive?

Only if the price reflects it. Non-exclusive leaves you free to license again.

When should I get paid?

Ideally on delivery or approval, not on resale. Net 30 to 60 days after approval is common.

Who should review the agreement?

An attorney who handles technology or data contracts.

Sources
  1. Troveo: Can a company license its data for AI?. https://www.troveo.ai/resources/license-company-data-for-ai
  2. Polyshares published terms. https://polyshares.com/