License-Back Clause, Provision

A provision in a contract, assignment or license agreement that requires the recipient of intellectual property rights (e.g., the licensee) to license back to the grantor or licensor certain rights to practice the intellectual property or improvements to the intellectual property.  Thus a license back provision might cover:

  • In an assignment of a patent, a license back of certain field of use or territories to the assignor;
  • In a patent license, a provision requiring the licensee to license to the licensor improvements to the intellectual property.

License back provisions may raise issues in competition law and are generally addressed in competition licensing guidelines.  They are particularly sensitive if they are exclusive license-back provisions.

In intellectual property licenses involving standards, it is not unusual to require licensees to license back to the licensor (or the standard setting group), on a non-exclusive basis, with rights to sublicense, any essential intellectual property, in particular patents, necessary to practice the standard as it may be evolved. This is done so as to preserve the integrity of the standard. The term grant-back clause is a near synonym, but may suggest an assignment. Non-exclusive license-back clauses raise fewer competition issues than grant-back clauses.

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