If your business holds intellectual property, it might be necessary to allow other entities to exploit it. This might be because they are best able to manufacture an invention or distribute a product to a particular market. There are various mechanisms that allow this, once of which is the sole license.
You can learn more about this subject on our intellectual property law pages.
What is a sole license?
A sole license is a legal contract in which the owner of an intellectual property right, the licensor, authorises another party, the licensee, to exercise their intellectual property rights.
A sole license means the licensee is the only licensee in that territory or for that group of customers. However, the licensor can still compete with the licensee. This is distinct from an exclusive license, where the licensor themselves cannot compete with the licensee.
Sole licenses and exclusive licences
Sole licences are less risky than exclusive licences for the licensor as they are not totally dependent on the licensee. However, the royalties with a sole license are usually slightly lower. For example, a sole license granted by the holder of a patent or a copyright can give the license holder a limited right to reproduce, sell, or distribute the work.
The sole licensing agreement should be drafted carefully and cover several aspects, including:
- How the fees and royalties are calculated and when they are paid
- What the licensee is allowed to do
- The territories the agreement covers
- How long the agreement lasts and who can terminate it
Drafting licensing agreements
Most agreements will be drafted by intellectual property solicitors. They will take into account their client’s requirements and seek to protect their interests. If only one side instructs a solicitor however, there is a risk that the resulting agreement will be unbalanced, being overly favourable to one party. Although sole licenses are designed to allow competition, they should not favour one entity over the other, at least not without specific agreement.
If you would like to draft a sole licence then Caven can put you in touch with a local specialist intellectual property solicitor free of charge. Please call us at 0808 1497 931 or complete the web-form above to speak to an advisor.