Are exclusive and non-exclusive licensees given different rights in respect of the enforcement of the licensed IP, and if so, how do those rights differ?
Intellectual Property (2nd edition)
Except as otherwise stipulated in the licensing contract, exclusive licensees are entitled to bring an action for infringement if, after notice, the owner of the IPR does not bring the proceedings.
Non-exclusive licensee cannot introduce infringement actions but may join the infringement proceedings initiated by the owner of the IPR in order to obtain compensation of the prejudice suffered.
- patents: Article L.615-2 of the IPC;
- trademarks: Article L.716-5 of the IPC;
- designs: Article L.521-2 of the IPC.
Unless this is expressly excluded in the license agreement, the exclusive licensee is entitled to bring a claim for infringement against third parties, without the consent of the licensor. On the contrary, non-exclusive licensees do not have the capacity to initiate such proceedings. Any licensee may join an infringement action in order to claim its own damages.
Non-exclusive licensees are not allowed to commence infringement proceedings against third parties. Exclusive licensees have this right in the same way as the original right holder. The right holder may limit the scope of such rights in the licence agreement.
With regard to registered rights, the licence agreement has to be registered with the Patent Office for the enforcement rights to be effective against third parties.
Under Italian Law, the owner and the exclusive licensee of an IP right can enforce the IP right. The possibility for the non-exclusive licensee to enforce the licensed IP right remains unclear, although is generally admitted by Italian case-law.
The difference of exclusive and non-exclusive licensees is that in case of an exclusive license the licensor cannot grant any other license regarding the licensed intellectual property and he cannot use or exploit the intellectual property himself.
Non-exclusive licensee - Non-exclusive licensees cannot sue for patent infringement. However, in some circumstances, they can join a claim seeking compensation for damages suffered and unjust enrichment. When the license is non-exclusive / unique, the right to file a claim remains with the owner of the right and the licensee can join as a party to the proceeding.
Exclusive licensee - An exclusive licensee can sue for patent infringement, if the exclusive license has been registered in the patents register. A license that has not been registered is not binding on third parties.
The law does not relate to the distinction between licenses, but it is assumed that a unique license entitles the license holder to a right to file a claim. In a non-unique license, the right to file a claim remains with the owner, when the licensee can join as a party to the proceeding.
A claim of copyright infringement can be filed by the copyright holder. If a unique license is granted, then the licensee may file a claim as well.
Non-exclusive license - the license is granted to one or more licensee and does not preclude the holder from granting licenses to any other person and does not prevent the holder from using the mark.
Exclusive license - the license is granted only to one licensee and precludes the holder from using the mark and from granting licenses to any other person);
Sole license - the license is granted only to one licensee and precludes the holder from granting licenses to any other person but does not prevent the holder from using the mark.
The difference between an exclusive license on an intellectual asset and a nonexclusive one is given with respect to the obligation of the licensing party not to grant new licenses on the respective intellectual registry or work, but not on the possibility of exercising actions in defense of the respective application, right or intellectual work.
According to the leading opinion, non-exclusive licensees generally need the consent of the rights owner to initiate legal proceedings against third parties/infringers.
In the case of trademarks, the law expressly distinguishes between exclusive and non-exclusive licensees and provides that the exclusive licensee may independently and without the consent of the proprietor initiate such proceedings, if the trademark owner, after formal notice, does not himself bring infringement proceedings within a reasonable time period. Of course, the licensing contract may provide otherwise.
Exclusive licensees have certain statutory rights to bring infringement proceedings in their own name, but the right owner must be joined in the proceedings, either as co-claimant or as a further defendant. Non-exclusive licensees, on the other hand, do not have the right to commence infringement proceedings. However, non-exclusive licensees of trade marks can call upon the proprietor to take action, and may take action themselves if the proprietor does not do so.
However, it is worth noting that these statutory defaults are commonly varied in negotiated licence agreements, so it is important to check the governing agreement to confirm the parties' rights in relation to infringement proceedings.
In case of trademarks the holder of an exclusive license has the like rights as the proprietor, whereas, in non-exclusive license, licensee has limited rights.
Generally, only the owner and successors in title can sue another party for patent infringement. An exclusive licensee will typically have the right to sue another party under the patent to protect the exclusivity granted. A non-exclusive licensee does not have the right to sue another party under the patent – the patent owner must be joined in any such lawsuit.
Under certain circumstances, an exclusive licensee can pursue a trademark infringement action. A non-exclusive licensee cannot.
The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of section 411, to institute an action for infringement of a right to which they have exclusivity. A non-exclusive licensee cannot sue another party for copyright infringement.
(d) Trade Secrets
In at least some jurisdictions, both exclusive and non-exclusive licensees may bring an action for misappropriation of the licensed trade secret.
There is no distinction between the rights of exclusive and non-exclusive licensees to request the patentee to institute infringement proceedings unless there are provisions to the contrary in the licence contract.
Where the patentee refuses or fails to institute infringement proceedings within three months from the receipt of the request, the licensee is able to institute the proceedings in his own name after notifying the patentee of his intention to do so. The patentee has the right to join in the proceedings.
There is no distinction between the rights of an exclusive and non-exclusive registered user. The registered user is entitled to call upon the registered proprietor to take proceedings for infringement of the trade mark, and if the registered proprietor refuses or neglects to do so within two months after being so called upon, the registered user may institute proceedings for infringement in his own name as if he were the registered proprietor and shall make the registered proprietor a defendant (subject to any agreement subsisting between the registered user of a trade mark and the registered proprietor of the trade mark).
Where the registered proprietor fails to exercise the rights that has been conferred to them by their registration to the prejudice of the registered user, the registered user may apply to Court for an order, including ordering the registered user be recorded as the registered proprietor of the trade mark via rectification of the Register.
There is no distinction between the rights of exclusive and non-exclusive licensees in respect of enforcement. Except against the copyright owner, the exclusive licensee shall have the same rights of action and be entitled to the same remedies as those available in a legal action brought by a copyright owner for infringement of copyright as if the licence had been an assignment.
Where an action for infringement of copyright is brought either by the copyright owner or the exclusive licensee, and the action relates to an infringement in respect of which they have concurrent rights of action under that section, he is not entitled, except with the leave of court, to proceed with the action unless the copyright owner or the licensee is joined as a plaintiff in the action or added as a defendant. An exclusive licensee however, may obtain an interlocutory injunction without having to join the copyright owner as a party in the application.
Where an action, in so far as it is brought by the copyright owner for infringement of copyright, relates to an infringement in respect of which the owner of the copyright and the exclusive licensee have concurrent rights of action, and an account of profits is directed to be taken in respect of that infringement, then subject to any agreement of which the court is aware whereby the application of those profits is determined as between the owner of the copyright and the exclusive licensee, the court shall apportion the profits between them as the court may consider just.
Where an exclusive or non-exclusive licensee wants to institute any infringement proceedings, the licensee must prove that they had made a prior request to the registered owner to institute proceedings for the infringement complained of by him and that the registered owner had refused or failed to institute the proceedings within three months from the receipt of the request. The registered owner however still has the right to join the proceedings.
Exclusive and non-exclusive licensees have the same rights in respect of the enforcement of the licensed IP. The rights of both exclusive and non-exclusive licensees depend on what are granted to them under the license agreement.
The holders of an “exclusive registered license” of a patent, utility model right, trademark right or design right are eligible to seek an injunction against or compensation for damages from the infringer of the exclusive registered license. The holders of other types of licenses, on the other hand, are generally not in the position to make such claims. However, there are court decisions which found that the holders of an exclusive non-registered license are eligible to seek compensation for damages depending on the circumstances.
The UAE IP Laws do not differentiate between exclusive and non-exclusive licensees in respect of the enforcement of the licensed rights.
In this respect, the Patent and Design Law specifies that a licensee has the right to enforce its recorded licensed rights against a third party infringer provided that he has notified the patentee of such infringement by registered letter and the patentee does not initiate proceedings within 30 days from the notification date.
Both licensees give the same rights to enforce the licensed intellectual property rights. However, such right can be limited completely or partially according to what the parties agreed.
Patent: The Indian patent law provides similar rights to the exclusive license holder such as those of the patentee and such an exclusive licensee has the right to initiate an infringement suit against an infringer if an act of infringement is committed after the date of the license.
Trade mark: in terms of the exclusive and non-exclusive licensees, there is no difference in terms of enforcement.
Copyright: No difference in terms of the enforcement rights granted.
Designs: A non-exclusive licensee does not possess the right to claim for such infringement. This condition is also applicable for registered designs.
No, exclusive and non-exclusive licensees may enforce the licensed IP as long as the parties have not agreed otherwise.
In case of an exclusive licence the licensee receives exclusive rights to use the respective intellectual property object in accordance with the provisions provided for in the licensing agreement and the licensor retains the right to use the object insofar as this right has not been transferred to the licensee. In case of non-exclusive licence, the licensor, when granting to another person the right to use the intellectual property object, reserves the right to use this object, as well as the right to grant a sublicence for the same object to third persons.
The holder of the exclusive license may bring an infringement proceeding on its own, whereas the holder of non-exclusive license require the owner's consent to bring an infringement action. (the holder of non-exclusive license may join an infringement action brought by the owner)
Copyright (including database rights) – No.
Yes. Under the IP law, no provision preventing exclusive or non-exclusive licensees from enforcing licensor’s IP rights, however, to prove that he/she has good standing to initiate an IP rights claim, the evidence of signed license contract shall be supplied.
Non-exclusive licensees generally need the consent of the rights owner to initiate legal proceedings.
The exclusive licensee is considered to be eligible to initiate legal proceedings regardless of the consent of the proprietor unless it has been otherwise agreed upon in the licence agreement.
Maltese law allows for licences to either be exclusive or non-exclusive. With regard to trade marks and designs, exclusive licences grant a higher level of rights over and above the normal type of licence.
The rights and remedies of an exclusive licensee of a registered trade mark of design right are concurrent with those of the IPR proprietor, and references in Maltese law to the proprietor relating to infringement are construed as applying to the exclusive license. The exclusive licensee is entitled to bring infringement proceedings in his own name against any person other than the proprietor. An exclusive licensee will have the same rights against a successor in title who is bound by the licence as he has against the person granting the licence. Moreover, an exclusive licence may provide the licensee with the same rights and remedies in respect or matters occurring after the grant of the licence as if the licence had been an assignment.