Grant-Back Clause

Provision in a license agreement or assignment typically of patents, but sometimes of other IP rights), which can either:

(a) requires a licensee to assign or license any improvements it develops back to the licensor, usually with rights to sublicense. This type of grant-back clauses are common where the licensor wishes to preserve a standard. Grant-back clauses can raise problems under Competition Law, especially if they require the licensee to assign the rights or grant the licensor an exclusive license to the improvement. License-Back Clause is sometimes used as a synonym for a grant-back clause.

(b) refers to a license-back by the assignee of certain rights in an assignment of intellectual property, especially patents – these are sometimes also referred to as ‘retained rights.’ If poorly drafted, the rights granted to the assignor may create a standing problem for the assignee under US law, especially if the assignee, as a result, does not receive substantially all rights in a patent.

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