Have-Made, Right to

Theoretically if a licensee chooses to contract-out the manufacturing of licensed goods or the use of a licensed method to produce goods for the licensee, that subcontract may involve a sub-license. Since the extent of the right to grant sublicenses under a license agreement is often unclear, and indeed sub-licenses as such may be prohibited by the agreement or not automatic under applicable law, it has become standard practice to state whether the licensee has received the right to engage in such contracting-out, and what restrictions are placed on this activity.

Such a have-made provision should be understood as having either of three effects, depending on applicable law, it:

(a) confers a right the licensee did not have;

(b) confirms a right the licensee did have, but perhaps constrains its exercise; or,

(c) it simply clarifies the arrangement.

A well-written license agreement will, at least in the interest of (c), address the issue. Have made clauses are frequently complex – for example they may require the licensee to sell all the have-made items under its own brand-name, especially where confidential information is involved they may restrict the third-party manufacturer list to companies in certain countries and they may have onerous accounting and audit standards, and if there are Export Control provisions in the license they may be made subject to these provisions.