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.