Exclusive licence
Intellectual Property Rights

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 may be granted an exclusive licence to distribute a product within a named territory is entitled to distribute the product 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 the subject matter of the licence.

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 diameterically opposite position where they wish to grant the narrowest licence possible. In the final analaysis, the licence ought to be as broad - and no more - to facilate the commercial requirements to allow the parties to use the subject matter of the contract to meet the agreed commercial ends.

A person granting an exclusive licence should be creaful 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 limititions 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.

Such 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.