Have you got a licence to kill your own intellectual property rights?
A point of contention which has popped up a few times recently whilst negotiating client’s intellectual property (IP) licences, is the type of licence actually being granted. There are some common misconceptions about whether the licensor has the right to
continue to use the IP in question. I therefore thought it would be helpful to provide a brief overview of the different rights and obligations associated with the different licences on offer.
Caution should be taken when referring to an exclusive licence. Whist it is the intention of the parties that the licensee has exclusive use of the IP in question, exclusivity means exactly that. This licence is so exclusive that even the licensor is prevented
from exploiting its own IP. As a licensor, if you wish to continue to use your own IP, or if you have previously granted a right to use the IP to a third party, this licence should be avoided.
This licence grants the licensee the right to use the IP, but also allows the licensor to continue using and exploiting the IP in question. The licensor may also licence the IP to other licensees. This kind of agreement is often used in franchising for example.
A co-exclusive licence is a helpful hybrid of an exclusive and non-exclusive licence. Here, the licensor may continue to use its own IP and grant a licence to more than one licensee. However, the parties agree that further licences will only be granted to a specific category or group of licensees. For instance, the licence could list the names of potential licensees or limit licenses to a geographical area.
A sole licence is one where the IP may be used by both the licensor and the licensee but the IP cannot be licenced to any other third party.
The type of licence in question can get even trickier when negotiating with a party outside of the UK/EU. Having experience in dealing with a number of US entities, a licence is often referred to as ‘sole and exclusive’ which really complicates matters!
The terms of the licence and whether the licensor has the ability to exploit its own IP, and grant a right to other licensees, should always be agreed from the outset where possible to avoid any misunderstanding.
If you have any queries with regard to any IP matters then please do not hesitate to get in touch with Abi Sinden, or call us on 01202 525333.