Exclusive and non-exclusive licences

This is a super quick video just to clarify the different types of copyright licenses that you're likely to come across in practice. The first type of license is known as an exclusive license. Like assignments, exclusive licenses must be in writing and signed by the licensor. An exclusive license can be limited in various ways such as by duration, place, rights granted and the purpose for which the rights are granted. A copyright owner can also impose conditions on the license grant. The important thing to understand about an exclusive license is that the right is granted exclusively to the licensee. This means that the copyright owner cannot grant the same right to anyone else for the term of the license. It also means that the copyright owner themselves cannot exercise that right for the term of the license. The right is granted exclusively to the licensee, even to the exclusion of the copyright owner. This means that even though copyright owners retain ownership, if the exclusive license is very broad, practically its effect may not be much different from granting an assignment. The second type of license is a non-exclusive license. These do not have to be in writing. As the name suggests, a non-exclusive license can be granted to many different people at the same time and the copyright owner retains the rights to do as they wish with their copyrighted work. The license can be limited in the same ways that an exclusive license is limited such as by rights granted or duration for which the rights are granted. Non-exclusive licenses are the basis for all our open licensing regimes such as Creative Commons licences. Finally, there is a third type of license called a sole license. This is not a very common license and the term is not a very well-known one but it's good to be aware of. A sole license is basically the same as an exclusive license except that the copyright owner also retains the right to exercise the rights granted. This means that only the licensor and the licensee can exercise the rights granted but the copyright owner cannot grant the same rights to anyone else.

You've come up with a brilliant idea. You've done the hard work to develop your invention and now you've finally secured your patent. Your next step is to consider, how will you commercialise your IP? That is, how will you get your product or service into market so that you can benefit from your great idea and the hard work you've put in? There are a number of ways of doing this. You could for example commercialise the invention yourself. This would involve you completing the product development, you setting up and managing the manufacturing and then doing the marketing, the sales and the distribution of the product without external assistance. Many patent holders however do not have the experience, the resources, nor the interest to undertake all this. Accordingly, patentees often look to work with others to commercialise their IP and one of the most common ways of doing this is through issuing a patent licence. This involves you giving permission for others to use your IP under certain terms and conditions. The licence is a contract between you and the licensee to commercialise your product. In granting such licences, there are however a number of factors that need to be carefully considered. Firstly, there are different types of licences and you'll need to consider which will work best in your circumstances. You could issue an exclusive licence. An exclusive licence is one where the licensee is given the right to exploit the IP throughout the patent area to the exclusion of the patentee and all other persons. You could issue a sole licence, which is similar to an exclusive licence but allows you the patentee to still use the IP. Finally, you could issue non-exclusive licences, which allow more than one person and the patentee to exploit the IP. You may want to place certain limits on the non-exclusive licences as you grant. For example, you could allow a licensee to only operate within a certain territory of the patent area or you could limit the licensee to operating only in a particular industry or for a particular class of product. Once you've decided on the licence types, you then need to consider the commercial arrangements you'll negotiate in order to be compensated for the licence. Many patent holders require the licensee to pay them royalties. So for example, they may require payment of a royalty based on sales calculated as a percentage of the product sale price. Alternatively, a patentee may wish to negotiate lump sum licence fees. This could include an upfront fee on signing the licence agreement and then fees payable at particular milestones in the product commercialisation such as when manufacturing commences or when certain sales volumes are met. There's no one-size-fits-all rule here and how you structure the royalties and fees and the value of the compensation arrangements will differ in each case. Factors that will be relevant in the commercial negotiations include, what type of IP is it and how developed is it? The closer the product or the service is to market readiness, typically the higher the royalty. What type of industry is the IP in? Different industries have different rates of compensation and ultimately what is the relative bargaining position of the licensee and the licensor. Once you've determined the commercial arrangements, you should consider any specific conditions you want to have in a licence agreement. For example, do you want to require the licensee to keep certain records and make them available to you? Do you want to place any restrictions on the ability of the licensee to sub-licence or assign the licence to others without your consent? Do you want to be able to terminate the agreement if the licensee does not deliver on key milestones or achieve certain sales targets? Where you have an exclusive licence based solely on royalty payments, protection such as these may be critical. And finally, there a couple of other issues that you will need to consider. If your patent is owned jointly, you will need the consent of all co-owners to grant any licence to avoid any confusion and future misunderstandings. You should also set up the terms of the patent licence in a contract and you should register the details of any patent licence with the Patent Office. Issuing a patent licence can be a great way to allow you to commercialise your IP. Carefully considering the issues outlined in this video and seeking appropriate advice will ensure that you establish licensing that works well for you and enables you to be rewarded for your creativity and hard work.