What is the difference between an exclusive grant of rights and a non-exclusive grant of rights? Is there any difference between an exclusive grant and a sole grant? In this short post, I try to answer these common contract-related questions.
Many types of commercial contract feature the grant of rights by one person or company (the “grantor”) to another. Such grants may be based upon independently enforceable rights, such as intellectual property rights, or simply on contract. For instance:
- technology transfer agreements may involve the licensing of patent-protected inventions
- distribution agreements typically grant the distributor the right to sell the relevant products in a particular market
- author agreements usually contain a grant of the right to produce and publish a book or other work.
The distinction between grants that are exclusive and non-exclusive is fairly clear. Where rights are granted on an exclusive basis, the grantor is saying: “I’m not going to grant these rights to anyone else, and moreover I won’t exercise them myself”. No such undertakings are given where rights are granted on a non-exclusive basis, and the grantor is free to grant the same rights to others, or to exercise the rights itself.
Less clear is the distinction between exclusive rights and sole rights. A common view (my own) is that a grant of sole rights should involve the grantor retaining the ability to exercise the rights itself, while undertaking to forbear granting the rights to others. But many contracts use the term to refer to a grant of exclusive rights. Given this lack of clarity, you should refrain from using the word “sole” in relation to grants of rights. And where you are interpreting a contract that includes a grant of sole rights, you need to look at the rest of the document to discover whether the grant is really exclusive.
Does a non-exclusive license have to be writing?
I am going to open small business (a publishing company). I will publish magazines with stories. I will collect stories through a website. Each user will have to agree with the terms and conditions of the website, which will state that the contract is non-exclusive. I will pay for the stories. Do I have to write a contract for each author for this non-exclusive license?
As a matter of English law, non-exclusive licences of copyright do not have to be in writing, but in your circumstances it would be sensible to include a licensing provision in the website terms and conditions, setting out what rights you have in relation to the stories, as well as payment terms.
We have produced a movie. A company called ABC wants to market the film for us. Their contract states we grant to them the non-exclusive sales rights and we appoint them as our non-exclusive agent to license, market, sell, advertise and publicise the picture and to sub-license such rights to thers.
Does this mean that we can continue to market it ourselves and that we could also grant these same rights to others at the same time?
That’s what the paraphrased text (“non-exclusive”) would appear to mean … but I would need to review the contract in question to comment on something like this with any degree of confidence.
If a licence is granted on a non-ecxlusive basis, and is royalty free, does that mean that no up-front payments can be taken?
“Royalty-free” seems to mean different things in different contexts. I’ve seen it used in relation to licences where there is a single up-front payment, but no ongoing payments. Elsewhere, I’ve seen it used in relation to licences that are entirely free of charge, or in relation to licences that are associated with paid-for services but don’t attract a separate charge. So, you need to look at all of the licence terms to determine the meaning.
An author hands what is apparently the only copy of a book manuscript to a close friend and says “Do whatever you want to with this.” Has the author orally agreed to transfer the exclusive or non-exclusive right to publish the author’s work?
I don’t know, and wouldn’t like to guess.
Our company recently got telecom project telephone marketing sale non exclusive reseller, we can agree another same type of project exclusive or non exclusive reseller?
I’d need more information to comment on this usefully. The first thing you should do is read any written contract: what exactly does it say? In respect of what is it non-exclusive?
Been in contact with the authorized copyright holder, we are trying to set up and eclusive copyright license that allows us to be the sole user of the copyright for a specific market. He asked us to research the forms and contracts to deduce what we should use. Any direction I could be pointed towards? Thank you in advance.
I have a sales agency. I have recently found that my principal started to sell to a customer which I was selling to since more then 5 years: the same product, under the same brand name, through another agent. Yes, I am a non-exclusive agent. But is it legal to do so with the existing customers and how the interests of a non-exclusive agent protected in this case?
A lawyer would need to see all the documents and talk to you in detail before advising on this question.
Is it possible in a contract to include both an exclusive rights and non exclusive rights. For example a Work has an exclusive right to be published and sold in one particular country only and then the publisher will also have a nonexclusive rights to distribute in other countries?
Yes it is possible; indeed, it is common. Just a matter of drafting.
Hello sir, I have idea of services company and I want to take all copyrights and exclusive rights. What is the process of securing my new busines idea and my investment?
The legal rights in play depend to a significant extent upon what you want to protect. As a matter of English law, the idea of a particular business model will not usually be protected by IP, but for so long as the information is not public you may be able to get some protection using non-disclosure agreements and the law of confidence.
Copyrights protect relevant types of work (eg written works) and subsist automatically.
Other rights to consider include patents (for inventions), trade mark registrations (for logos and business names) and design rights (for both 2D and 3D designs).
I can’t however advise on what is right for you without knowing a great deal about the business (ie taking you on as a client).
Hello, our company is reviewing an ‘agency contract’ which has been drawn up by the supplier of a product we wish to have exclusive rights to sell within a specific country as part of our engineering services.
The supplier’s contract uses the word “project based exclusive agent” rather than just “exclusive agent”. Does the wording “project based exclusive” limit our “exclusive rights”? Here is an example of the terminology….
“For the purpose of business operation, The COMPANY decides to appoint and empower the AGENT as its project based exclusive agent for the marketing and promotion of its SYSTEMS and as the AGENT also agrees and accepts to act as the project based exclusive agent of the COMPANY;”
I’d need to read the contract and perhaps talk to you about the background in order to answer this question.
We are a wholesale company. Is it a good business decision to give a retailer exclusive rights to sell our products on Amazon when we have several retailers already selling our products on Amazon. Is there any benefit for the company giving exclusive rights to one person?
… whether this would be a good business decision in your particular circumstances.
Also NB in some circumstances there can be contractual or legal issues with refusing to supply an existing distributor.
Dealing with a single distributor in a channel can make your life easier but, in general, when you grant exclusive distribution rights, you will want something else in return, such as performance commitments.
Hi I am animator/writer currently producing a TV series idea, with a company (I am not employed at this company). The company wants exclusive rights to the animation idea. Does this mean I would give them the full rights to my idea or just the rights to produce it??
Forgive me if I sound silly but I am not clued up on contracts.
I have leased an area of land off the Charity commission for the last forty seven yrs, this lease has entitled me to sole catering rights for the sale of food and drink. My lease is coming up for renewal and the landlords are insisting I relinquish my sole trader status, is this legal?
Hi Alasdair, I have several recording contracts that am hoping will be out of date now [from around 20 yrs ago]. The contracts don’t have a direct or specific “Term” duration but uses the phrase ” Full unencumbered copyright”. Could you help explain. Thanks in advance
Sorry – I think I would need to see the contracts + clarify your question(s) with you before providing any useful guidance here.
Can a licensor transfer to licensee a single right to use? Which requirements need to be met for the third party to become the rightful user?
I’m assuming copyright is the right that is in play here.
I’d need more details to give a very confident answer to this question – but copyright is very flexible and to a large extent if you can define a licence scope, then that scope can be valid.
There are no particular formalities needed for a non-exclusive licence of copyright, although a rightful user may well want documentary evidence of the right to use, detailing the exact scope of that right. That is precisely the purpose of a licence agreement.
Can a licensor transfer to licensee a single right to use the particular work forever? If yes would it be a non exclusive right?
I would usually refer to a licence as a “grant” rather than a “transfer”. The fact that a licence carries on forever (really, for the term of the applicable IP rights) does not make the licence exclusive or non-exclusive. It could be either – although perhaps your use of the word “transfer” here implies some kind of exclusivity?