Revisiting “Sole” and “Exclusive”

[Updated July 14, 2015: This topic is revisited in this 2015 post.]

I wrote about the phrase sole and exclusive in this 2010 post on AdamsDrafting. Last April Mark Anderson wrote about it in this post on IP Draughts. At the risk of overkill, I’d now like to take another crack at the subject.

“Sole” and “Exclusive” in Licensing

In licensing circles, it seems generally accepted that there’s a distinction between an exclusive license and a sole license. In an exclusive license, only the licensee has the right to make use of the intellectual property. By contrast, in a sole license, the licensor agrees not to grant any additional licenses but retains the right to make use of the intellectual property. See Drafting License Agreements § 1.02 (Michael A. Epstein and Frank L. Politano eds., 4th ed. 2012); Mark Anderson & Victor Warner, A–Z Guide to Boilerplate and Commercial Clauses 246–47 (2d ed. 2006) (regarding English law) [Hey, Mark! Is this what I should be citing?].

A sole license could also be understood to mean not that the licensor retains the right to make use of the intellectual property, but that prior licenses granted are preserved. Roger M. Milgrim, Milgrim on Licensing § 15.33.

You could use the terms exclusive license and sole license in contracts, but you can’t count on either term to convey clearly the intended meaning—they’re terms of art. The potential for confusion is aggravated by (1) the inconsistency among commentators regarding the meaning of sole license and (2) prevalence of the phrase sole and exclusive, which serves to muddy the notion of distinct meanings for sole and exclusive (see below).

It follows that it would be prudent to be more explicit. You could do so by using exclusive or sole as a defined term. See A–Z Guide to Boilerplate and Commercial Clauses 247, 250 (2d ed. 2006). Or you could express the intended meaning directly in the granting language. See Milgrim on Licensing § 15.33 (stating that to express the concept of a sole license, “The terminology typically employed by the draftsman is ‘exclusive license,’ subject, however, to an express reservation of the continued right to use”).

Using in a contract the phrase sole and exclusive license, with the two mutually incompatible terms combined, is a sign of confusion on the part of the drafter.

“Sole and Exclusive”

Drafters can always do better than use the phrase sole and exclusive, with its inherent redundancy.

Instead of sole and exclusive remedy, you could say sole remedy or only remedy. For purposes of a jurisdiction provision, say exclusive jurisdiction rather than sole and exclusive jurisdiction. Or more significant surgery might be required: Instead of saying that all interests in something are the sole and exclusive property of Acme, say that Acme owns all those interests. And saying that Widgetco may do something at its sole and exclusive option raises issues comparable to those raised by at its sole discretion (see x.x) and from time to time (both discussed in MSCD).

For granting a license, the problem with sole and exclusive goes beyond redundancy (see above).

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.