Your employer cannot legally use your licensed product without paying you, unless your licensing agreement explicitly allows free or unpaid use. Licensing is a contract, and both sides are bound by its terms-including payment.
Licensing your LLC’s product to your employer can be a smart way to generate revenue while maintaining ownership. But problems arise when the employer starts using your product without honoring the payment terms. If there’s no written agreement-or if the contract lacks clear enforcement clauses-you may find yourself chasing payments or disputing unauthorized use. Fortunately, with the right approach, you can protect your rights and ensure your business gets paid fairly.
Contents
1. Licensing Is a Contract-Payment Is Not Optional
Licensing agreements create a legal framework where one party (your LLC) gives another (your employer) permission to use something-software, content, designs, etc.-under specific conditions. Those conditions usually include:
- When and how the product can be used
- Who can access it
- What they’re allowed to do with it
- How much and how often they must pay
If your employer agreed to these terms and then uses your product without paying, they’re in breach of contract. You may have grounds to pursue enforcement or damages depending on your agreement and local business laws.
2. What If There’s No Formal Agreement?
If you allowed your employer to use your product informally-without a signed licensing contract-things can get murky. In that case, you’re dealing with a verbal or implied agreement, which is harder (but not impossible) to enforce.
To make a case for unpaid use, you’ll need documentation that shows:
- You created the product and own the rights
- You permitted your employer to use it under certain conditions
- You expected payment as part of that use
- They accepted and used the product in a business setting
Email records, invoices, internal memos, and dated versions of your product can help establish that an implied agreement existed. However, going forward, a written contract is essential.
If you haven’t yet licensed your product-or if you’re negotiating a deal now-there are several ways to prevent misuse:
- Create a detailed license agreement outlining payment terms, usage rights, and consequences for nonpayment
- Include audit or termination clauses to give you legal leverage
- Use version control or access gating to restrict usage if payments stop
- Revoke the license in writing if the employer fails to pay within the contract window
These protections can help you avoid being taken advantage of-especially when licensing to an employer with more resources or influence than your LLC.
4. Can You Reclaim the Product or Cancel the License?
Yes-if the license terms allow it. Many licensing contracts include a provision that allows the licensor (you) to cancel or revoke access if the licensee (your employer) fails to meet obligations such as payment.
This can include:
- Cutting off access to software or online services
- Requesting removal of your product from internal systems
- Sending a formal cease-and-desist letter
You may also be entitled to pursue legal damages or back payments, especially if you’ve suffered business loss due to the breach.
5. Steps to Take if Your Employer Isn’t Paying
If your employer is using your licensed product without paying:
- Review your licensing agreement to confirm the terms and their breach
- Send a formal notice (email or certified letter) reminding them of the payment terms
- Pause or revoke access to your product if the contract allows it
- Issue a final invoice or demand letter through your LLC
- Consult an attorney if you’re considering legal action
In many cases, a clear and professional notice is enough to trigger payment-especially if your employer wants to avoid legal exposure or reputational harm.
6. Should You Avoid Licensing to Your Employer Altogether?
Not necessarily. Licensing to your employer can be beneficial if done correctly. Just be cautious and treat them like any other client. Don’t assume that familiarity or trust replaces the need for a written contract and clear terms.
Your LLC’s products are your property, and no one-not even your employer-has the right to use them without honoring a licensing agreement. If you’re seeing unauthorized use or unpaid licensing, take immediate steps to clarify the terms, document the breach, and enforce your rights. With proper contracts and professional boundaries, you can license your work safely and profitably-even to the company that signs your paychecks.
