Exclusive License

A license in which the licensor undertakes to the licensee, that it will grant no license of the same rights to any further licensee. There are a number of points that can be misunderstood about exclusivity: first, there may be pre-existing non-exclusive licenses, the exclusivity simply means there will be no more licenses (although failure to disclose the existence of prior licensees may permit the new licensee to seek rescission of the agreement). Second, depending on the terms of the license and applicable contractual law, exclusivity may be limited to the field-of-use of the license or may preclude any further licenses of the intellectual property rights in any field-of-use. To avoid these complications, exclusivity provisions should be carefully drafted and explicit. Usually a well-drafted exclusive license will condition continued exclusivity on minimum sales/royalties as well as activity in each exclusive market. See Field-of-Use, Minimum Sales Requirement.

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