sublicenses

These are licenses that allow a licensee to grant further licences to use the subject property in their own right, without reference to the intellectual property rights owner. The right to sublicense is generally considered a valuable right, as it allows the licensee to on-licence the property which is the subject of the licence to third parties.

An owner of rights should be reluctant to grant sublicensing rights to inexperienced businesses in a particular field as the sublicences may grant extensive rights to use names of products, goods and services in an unrestricted fashion. There is a good argument that the rights should be carefully restricted or other limited in the event that the transaction is unsuccessful, as misuse or irresponsible sublicensing may cause significant brand damage to the intellectual property rights owner.

Sublicenses are frequently (and should properly) be tied to registered intellectual rights, where available, such as a registered trade mark or registered patent. In the case of copyright licenses, some care ought to be taken to ensure that the sublicense granted in respect to named intellectual property rights, and rights to terminate the sublicense in the event of a breach of the terms of the licence to bring a prompt end to the relationship. Failures to do so may result in a situation where a brand name or other rights are tarnished, affecting the goodwill and reputation of the ultimate licensor - that is, the intellectual property rights owner.

These matters are able to be regulated by the original licence, which is best recorded in writing so as to perform the terms upon which use and further permissions may be granted.

A failure to comply with the terms of a sublicence, as with the terms of a licence would, in all likelihood amount to a breach of contract and a concurrent infringement (otherwise known as a breach) of the licensor's intellectual property rights.

Usage: The intellectual property rights owner authorised the distributor to sublicense the exclusive right to distribute the software.

Related Words: licence; bare licence; intellectual property; copyright; patent; registered design rights; registered trademark rights.