Exclusively for Everyone: Oxymorons ‘R’ Us

In 2000, the UK department store, Marks & Spencer, unveiled a new strapline, Exclusively for Everyone, that was to feature in their advertisements for nighties for most of the Noughties.  Well, for all their products, really, but IP Draughts is susceptible to a finely-turned alliteration.

Every time he saw this strapline, the pedant in IP Draughts thought: you can’t be exclusively for everyone.  It is a self-contradictory statement.

Another phrase that induces this reaction in IP Draughts is sole and exclusive licence.  You can’t have a sole and exclusive licence.  It can be sole or it can be exclusive.  It can’t be both at the same time.

Usually, when the phrase appears in a licence agreement, the drafter intends to grant (or be granted) an exclusive licence.  IP Draughts has never encountered a drafter who argued to retain sole and exclusive when the potential contradiction was pointed out.  Typically, the phrase appeared in the template that the drafter used, and they didn’t change it before issuing the first draft.

So, why do some template licence agreements purport to grant a sole and exclusive licence?  This is a mystery.  If any reader can shed light on it, IP Draughts will be very grateful.

Most IP lawyers (IP Draughts would not presume to know the views of all IP lawyers; some of them have some very strange ideas) would understand the terms as follows.

If a sole licence is granted by a Licensor to a Licensee, the Licensor promises not to license anyone other than the Licensee within the scope of the licence, but the Licensor retains the right to conduct the licensed activities itself.

If an exclusive licence is granted, the Licensor promises not to license anyone other than the Licensee within the scope of the licence, and the Licensor also promises not to conduct the licensed activities itself.

There is no “official” definition of these terms, of which IP Draughts is aware, that would apply when the terms appear in contracts.  Exclusive licence is defined in some of the UK IP legislation, but only in relation to the use of that term in the legislation. For example, section 130 of the Patents Act 1977 defines exclusive licence as follows:

“exclusive licence” means a licence from the proprietor of or applicant for a patent conferring on the licensee, or on him and persons authorised by him, to the exclusion of all other persons (including the proprietor or applicant), any right in respect of the invention to which the patent or application relates, and “exclusive licensee” and “non-exclusive licence” shall be construed accordingly

Similarly the EU Technology Transfer Block Exemption Regulation defines “exclusive territory” for the purposes of that Regulation only, as:

a territory in which only one undertaking is allowed to produce the contract products with the licensed technology…

These definitions are consistent with the explanation of the term earlier in this blog posting.

Some US lawyers apply some “belt and braces” (or “belt and suspenders”) by adding to an exclusive licence the words “even as to the licensor” (as in “X grants Y an exclusive (even as to the licensor) licence…”).  These words emphasise that the licence is not a sole licence.

IP Draughts’ friend, Ken Adams, has argued that the distinction between sole and exclusive is one made up by lawyers, and that the distinction is not obvious from the words themselves.  Put another way, using these terms is “magic wordery”, and should be avoided.  IP Draughts does not subscribe to this view (although he doesn’t feel strongly about the point), as he feels these are technical expressions which should be used correctly, just as one should use the terms assignment, lease and charge correctly.  However, this objection can be overcome by defining the terms in the contract.  This may be desirable in any event if the drafter is concerned about the effect of EU competition law on the licence agreement.  The wording of exclusive licence clauses that seek to take into account EU competition law is beyond the scope of this posting.

Occasionally, IP Draughts has encountered semi-exclusive or co-exclusive licences.  He would definitely recommend defining these terms, as they are not in common use.  Typically the intended meaning is a variant on a sole licence.  The Licensor may not be able or willing to exploit the licensed IP itself, and may wish to appoint another company to do so in its place.  A semi-exclusive or co-exclusive licence, depending on how it is worded, may allow the Licensor to appoint a licensee in its place.  Thus the maximum number of parties exploiting the IP is two: (1) the Licensee, and (2) the Licensor or his substitute.

11 Comments

Filed under Licensing

11 responses to “Exclusively for Everyone: Oxymorons ‘R’ Us

  1. Chris, thanks for your comment. I am struggling to see a coherent pattern in this. UK copyright law allows for an assignment limited in time. Under section 90(2) CDPA 1988:
    “An assignment or other transmission of copyright may be partial, that is, limited so as to apply—
    (a)to one or more, but not all, of the things the copyright owner has the exclusive right to do;
    (b)to part, but not the whole, of the period for which the copyright is to subsist.”
    The question of the right to sue infringers (by the owner or exclusive licensee) is dealt with separately.
    Should we treat US copyright law as being in a mess, or am I missing something?

  2. Reblogged this on IP Draughts and commented:

    Last week’s golden oldie seemed to be popular, so here is another article from this blog’s archive. This time on exclusive, sole and non-exclusive licences.

  3. Pingback: Revisiting “Sole” and “Exclusive” « Adams on Contract Drafting

  4. Pingback: Koncision » Revisiting “Sole” and “Exclusive”

  5. David Marchese

    “An ordinary “licence” is a permission to the licensee to do something which would otherwise be unlawful. It leaves the licensor at liberty to do it himself and to grant licences to other persons also. A “sole licence” is a permission to the licensee to do it, and no one else, save that it leaves the licensor himself at liberty to do it. An “exclusive licence” is a permission which is exclusive to the licensee, so that even the licensor himself is excluded as well as anyone else.” per Lord Denning MR in Murray v. ICI Ltd [1967] 2 All ER 982.

  6. Vance Koven

    In addition, section 101 of the US Copyright Act places an “exclusive license” on the list of things constituting a transfer of ownership in a copyright, without mentioning a “sole” license.

    • Vance, that is conceptually very puzzling to this UK IP lawyer – how can a license be a transfer of ownership? The licensor must presumably retain some ownership rights, otherwise it would be an assignment. We used to have a provision in UK stamp duty law that an exclusive irrevocable licence was treated as an assignment for the purpose of stamp duty liability, but that is as far as we got in saying that a licence was an assignment.

      • Vance Koven

        Conceptually, the US definition reinforces your distinction between “sole” and “exclusive,” in that by giving an exclusive license, the licensor retains no rights whatever in the copyright (or at least that part of the copyright that has been exclusively licensed–don’t forget that a copyright under US law is a Medusa’s-head of separable rights). The licensor gets its royalty, and that’s it.

        Also, the definition is useful for purposes of copyright administration and remedies, because an exclusive license must be in writing and may be registered. Registration is prerequisite for filing an infringement action and, with further conditions, for obtaining certain statutory remedies.

      • The US Copyright Act recognizes that ownership can be transferred for a period of time, with the transferor retaining a future interest. An assignor retains nothing, other than possibly a royalty interest. That said, there are wrinkles. A songwriter for instance may assign composition to a publisher, but nonetheless have a right of termination under the Act. Furthermore an exclusive license is potentially terminable under the Bankruptcy Act, and where an income interest, such as a royalty, is retained by the transferor, arguably even what is described as an assignment by the parties might be treated by the court as terminable. The “transfer of ownership” for the purposes of the Copyright Act is a matter of determining who may sue for copyright infringement at any particular time. Generally, this is both the owner and the exclusive licensee pro tem.

  7. Interesting. Section 2(1) of the UK Copyright, Designs and Patents Act 1988 provides: “The owner of the copyright in a work of any description has the exclusive right to do the acts specified in Chapter II as the acts restricted by the copyright in a work of that description.”

  8. Interestingly, the Canadian Copyright Act (http://bit.ly/IcGFDe) uses the following language:

    3. (1) For the purposes of this Act, “copyright”, in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof, and includes the sole right
    (a) to produce, reproduce, perform or publish any translation of the work,

    and to authorize any such acts.
    The U.S. Copyright Act uses the term “exclusive rights” is 17 U.S.C. 106.

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