Non-exclusive license: Overview, definition, and example
What is a non-exclusive license?
A non-exclusive license is an agreement that allows someone to use a particular product, service, or intellectual property (like software, patents, or trademarks) without giving them exclusive rights. This means that the owner of the product or intellectual property can still grant the same rights to other parties. In simpler terms, a non-exclusive license allows multiple people or businesses to use the same thing at the same time.
For example, if a software company gives several businesses a non-exclusive license to use their program, all of those businesses can use the software, but no one business has the exclusive right to it.
Why is a non-exclusive license important?
A non-exclusive license is important because it gives both the licensor (the party granting the license) and the licensee (the party receiving the license) flexibility. The licensor can make money from licensing the same product or intellectual property to multiple parties, while the licensee can still use the product without having to compete with others who have the same rights.
For businesses, it’s a cost-effective way to legally use a product, service, or technology without needing full ownership. For licensors, it’s a way to maximize revenue by allowing several businesses to access their product at once.
Understanding non-exclusive license through an example
Let’s say you own a small business that manufactures custom merchandise. You decide to license a popular logo from a well-known brand to print on T-shirts. The brand agrees to a non-exclusive license, meaning you can use their logo, but so can other businesses. You pay for the right to use the logo, but you don’t have exclusive access—other businesses can also use the logo on their merchandise.
This allows you to offer a product that appeals to customers while the brand earns income from multiple sources.
Example of a non-exclusive license clause
Here’s an example of what a non-exclusive license clause might look like in a contract:
“The Licensor grants the Licensee a non-exclusive, non-transferable license to use the intellectual property described in this Agreement for the specified term. The Licensee acknowledges that the Licensor may grant similar licenses to other parties and that no exclusive rights are granted under this Agreement.”
Conclusion
A non-exclusive license allows businesses to legally use products or intellectual property without having exclusive rights. This type of license offers flexibility and can be a cost-effective way to access valuable resources. For SMB owners, understanding non-exclusive licenses can help you make strategic business decisions when using or licensing intellectual property, while also ensuring you don’t overpay for exclusive rights that may not be necessary for your goals.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.