Intellectual Property in Commercial Settings

What is a licence?

IP can also be commercially exploited through licence agreements. ‘Licence’ is essentially the legal term for permission to use.

Under a licence agreement, IP can be used for the purpose for which the licence is granted, but ownership is not transferred. Ownership continues to remain with the creator, inventor or other owner. The person granting the licence is known as the ‘licensor’ and the person receiving the licence is known as the ‘licensee’.

A licence may be granted for all IP rights held by the licensor, or it can be partial. For example, an owner of copyright in a book may grant a licence to publish the book in hard copy to one business and a licence to make the book digitally available to another business. These would be examples of partial licences. That same owner may grant a broad copyright licence to a film studio, which would give the studio the right to copy the book, share it online, adapt it (i.e. to a film) and perform it.

A licence may be granted on an ‘exclusive’ or ‘non-exclusive’ basis. Licences can be limited by territory (e.g. only in Australia) and are usually granted for a specific time (e.g. only for the next 10 years).

    Rights of a licensee
    Once a licence is granted, the licensor cannot object to the use of the IP by the licensee under the terms of the licence, except if the use falls outside the scope of the licence agreement (or the owner has withdrawn the licence). If a licensee uses the IP outside the scope of the licence agreement, the owner can exercise their rights and sue for infringement.