Exclusive licence

The exclusive licence is the contract by which the holder of a patent undertakes to grant no other licence over the invention, within the licensed territory and field. Depending on the drafting, the holder may or may not retain the right to exploit the invention itself. In practice, the exclusive licence gives the licensee a position close to that of an owner.

The scope of the exclusive licence

Exclusivity is defined by three parameters. First, the territory: the licence may be exclusive for France, for Europe or worldwide. Second, the field of use: the same patent may be the subject of separate exclusive licences for different uses. Third, the duration, which cannot exceed that of the patent. A precise clause must state whether the licensor retains a right of personal exploitation. Failing that, litigation is frequent.

The exclusive licensee’s infringement action

Article L. 615-2 of the French Intellectual Property Code allows the exclusive licensee to sue for infringement, unless otherwise stipulated, if the holder does not bring the action after formal notice. The exclusive licensee thus has a weapon which the non-exclusive licensee lacks. The action however requires that the licence be recorded in the National Patent Register. Recording should therefore be carried out upon signature.

The obligations of the exclusive licensee

In return for exclusivity, the exclusive licensee often bears an obligation of serious exploitation and minimum royalties. Failing that, the licensor may terminate the licence or convert it into a non-exclusive licence. Likewise, the exclusive licence is closely examined under competition law where it partitions national markets. The block exemption regulation on technology transfer agreements frames these clauses.

The firm drafts and negotiates exclusive licences and litigates the disputes arising from them, including infringement actions brought by the licensee. See our pages patent contracts and bringing a patent infringement action, and the text of Article L. 615-2 on Légifrance.

The exclusive licensee’s standing to sue and the extent of the rights transferred are checked against the documents, which we do as part of an intellectual property due diligence.