Non-exclusive licence

The non-exclusive licence is the contract by which the holder of a patent authorises a third party to exploit the invention, while retaining the right to exploit it itself and to grant further licences. It stands in contrast to the exclusive licence. In practice, it is the most common form of patent licence.

The rights of the non-exclusive licensee

The non-exclusive licensee acquires a right of exploitation, not a proprietary right. It cannot prohibit another licensee from exploiting the same invention. Likewise, it cannot assign its licence or grant sublicences without the consent of the holder. It does, on the other hand, benefit from the licensor’s warranty against eviction and against defects of the title, within the limits set by the contract.

The non-exclusive licence and infringement actions

The French Intellectual Property Code reserves the infringement action to the holder and, subject to conditions, to the exclusive licensee. Article L. 615-2 however allows the non-exclusive licensee to intervene in the proceedings brought by the holder in order to obtain compensation for its own loss. The non-exclusive licence must therefore organise the conduct of actions against infringers, failing which the licensee depends entirely on the diligence of the holder.

Recording and royalties

To be enforceable against third parties, the licence must be recorded in the National Patent Register kept by the INPI. Recording notably conditions the licensee’s intervention in the infringement action. Finally, the royalties of a non-exclusive licence are freely set. They take the form of a lump sum, a percentage of turnover or a combination of the two. A most favoured licensee clause protects the licensee against more advantageous terms later granted to a competitor.

The firm drafts, negotiates and litigates patent licence agreements. See our pages patent contracts and patent licence agreement, and the INPI information on the recording of licences.

Before an acquisition or a financing round, the inventory of existing non-exclusive licences conditions the value of the portfolio: we verify it in an intellectual property due diligence.