exclusive licence

An exclusive  licence, granted by a licensor, is one whereby the licensee is authorised to perform some activity in respect to property to the exclusion of all others, including the intellectual property rights owner. For instance, a person granted an exclusive licence to distribute a product within a named territory is entitled to distribute the product in the territory to the exclusion of all others.

A licence may be for a fixed or variable term, or a combination of both. After the licence has expired or terminated, the licensee will no longer be entitled to use or deal with the subject matter of the licence. There are usually formal requirements for granting an exclusive licence. Fir instance in the case of an exclusive copyright license, the Copyright Designs and Patents Act ("CDPA") requires that such licences are made in writing, signed by the licensor or on its behalf. The CDPA also permits an exclusive licensee to commence proceedings for infringements taking place since the licence was granted, as if transaction was an assignment; it also has the same rights and remedies against infringers as the owner of copyright, which are concurrent with the rights of the owner.

Granting exclusivity creates natural tension between the licensee and licensor, as the licensee will almost always wish to be licensed in broad terms; a licensor is typically in a diametrically opposite position where it wishes to grant the narrowest licence possible. There are good arguments to assert that the licence ought to be as broad - and no more - to facilitate the commercial requirements to allow the parties to the transaction to use or deal with the subject matter of the contract to meet the agreed commercial ends.

A person granting an exclusive licence should be careful to ensure that the rights they grant do not conflict with earlier rights that may have been granted by the licensor. If prior contracts grant such rights, it is more than likely that the licensor will place themselves in breach of contract with the previous licensees and the person to whom that intend to grant exclusivity.

Parties should cast their minds to ownership of new material created during the course of the licence, if there is to be any.  Spinoff technologies or materials may be created, or indeed purposefully created during the course of the licence. The ownership of the rights in these materials should be made crystal clear in the agreement. In addition to this, the licensor would be prudent to consider any limitations of use in the permission granted, such as restrictions in the industries that the subject matter may be used.

Sublicensing rights (i.e. to a third party) granted as part of the licence agreement should also be considered, and specified if it is to be permitted by the licensor.

Exclusive licenses grant special rights, such as standing to sue for intellectual property rights infringement without relying on the intellectual property rights owner. Such licences are usually granted expressly by contract, however they may be implied into the contract.

Usage: The licensor granted an exclusive licence to develop the software application.

Related Words: licence; bare licence; sublicenses; mere licence; sole licence; contractual licence; non-exclusive licence; perpetual licence; sublicence; intellectual property licensing.