Exclusive Versus Non-Exclusive Licensing

When you begin the process of licensing your property or amending an existing licensing structure, you will inevitably reach a point when you must decide whether your licensing will be exclusive or non-exclusive. Before you can determine which option is right for you, it is important to gain an understanding of what these terms mean and how they affect your property and business opportunities.

Non-Exclusive Licensing

A non-exclusive license allows the licensor to license the same property to numerous licensees while ultimately maintaining ownership of that property. Many companies find this option extremely beneficial because it can maximize profit opportunities through many licenses and protect the property at issue at the same time.

The number of potential licensees in a non-exclusive licensing agreement is typically unlimited. Under certain circumstances, however, the number of potential licensees might be limited to a set number. Licensee numbers can vary based on the needs of the licensor and the licensees.

Exclusive Licensing

It stands to reason that if non-exclusive licensing allows for many licensees, exclusive licensing allows for just one. And that is a correct assumption with one extremely important caveat: The licensee in an exclusive licensing agreement has rights to the property to the exclusion of all others, even the licensor. In agreeing to exclusive licensing, the licensor is giving up rights to assert control over the property and to even use the property freely.

While it might seem like non-exclusive licensing is always the way to go, there are some circumstances in which licensors gain the most from granting an exclusive license. It is vital, however, to understand exactly what you are conveying in your agreement.

“Sole” Licensing

Sometimes, licensing agreements will attempt to draw a distinction between “exclusive” licensing and “sole” licensing. In these situations, “sole” licensing refers to a grant to only one person or entity with continued right of ownership for the licensor. In other words, it is an exclusive license without that caveat.

This can become a sticky situation because the terms are so close in meaning. To avoid a battle of semantics, you should draft a completely clear agreement that specifically spells out what you are and are not granting to a licensee.

Hybrid Licensing

If one of the above types of agreements is not completely right for a licensor, the licensor might consider some form of hybrid agreement. This could entail an exclusive license for a period of time, followed by a non-exclusive license (or vice versa). A hybrid license can be accomplished by way of term licensing and separate agreements or by way of one agreement.

Licensing decisions can seem overwhelming because of their implications, but a skilled licensing attorney in Colorado can guide you through the entire process and make sure you reach the best agreement. If you have questions about licensing your property or want to start a licensing agreement, contact Larsen Law Offices, LLC, today by calling (303) 520-6030.