Intellectual property (IP) licensing gives the licensee the right to use, but not own, the IP.
The licence can be:
- an exclusive licence
- a sole licence
- a non-exclusive licence.
An exclusive licence is the most common form of commercialisation.
An exclusive licence is one where the licensee is given the right to commercialise the IP to the exclusion of all others, including the licensor.
Benefits of an exclusive licence
- IP owner: benefits by receiving an agreed sum that compensates for loss of future earnings and avoids the risk of the product not reaching the market or being successful.
- Licensee: benefits by knowing that they will be the sole recipient of the profits after bringing the product to a market-ready state.
Limiting an exclusive licence
Exclusive licences do not always provide blanket protection for the licensee. The IP owner can place restrictions that limit the licence.
- Product restrictions: restrict the licensee's use of the IP to a particular class of product.
- Field restrictions: restrict the licensee to a specific field of application.
- Territory restrictions: restrict the licensee to a specific geographical area.
The IP owner may choose to limit the licence to achieve one of two objectives:
- to retain the residual rights to commercialise in-house
- to license the IP rights to a number of different licensees, all being granted exclusive licences with complementing restrictions.