[Updated July 14, 2015: This topic is revisited in this 2012 post and this 2015 post.]
The recent Lawyers Weekly article that I linked to in a previous post contains the following:
The phrase “sole and exclusive license,” for example, is common yet contradictory. “Sole,” on the one hand, means only one person has the legal right to use the product. “Exclusive,” however, actually means only one other person has that right.
The phrase sole and exclusive license certainly occurs in granting language. Here’s a random example plucked from EDGAR:
LGLS hereby grants to GS and GS hereby accepts from LGLS a sole and exclusive license under the LGLS Patents, LGLS Know-How, GLAXO Patents, GLAXO Know-how to use, import, package, sell and offer for sale Products within the Field in the Territory, as well as the exclusive right to use the Trademarks in the Territory in conjunction with the use or sale of Products.
But sole and exclusive is also used with with right, owner, remedy, and doubtless other words. And a couple of IP books I looked at didn’t contain a discussion of sole versus exclusive.
So I’m uncertain about the analysis offered in the Lawyers Weekly article; I think that rather than containing contradiction and raising an issue over which word works best, sole and exclusive is just another example of plain old redundancy, the simplest solution for which is to lop off sole.
What do you licensing types think?
Ken, you have hit one of my pet hates: US agreements that use the phrase "sole and exclusive".
Here in old Europe, an exclusive licence (or appointment as distributor etc) means that the licensor promises not to license anyone else and promises not to exploit the licensed IP himself (in the relevant field, territory, etc). By contrast a sole licence means that the licensor promises not to license anyone else, but is allowed to exploit himself.
I have been negotiating and drafting licence agreements and distribution agreements for over 25 years, and I would say that in my experience these meanings have 95% common understanding. There is always someone who thinks it is the other way around. If I were negotiating an agreement with a decent firm of UK lawyers on the other side, I wouldn't think twice about these meanings; but in some situations I might define the terms, to avoid uncertainty. There are UK statutory definitions of "exclusive licence" (eg in the Patents Act 1977) that are consistent with the above.
Then we get those occasional agreements where a "sole and exclusive licence" is granted, usually originating from a US precedent. I agree that these terms are contradictory. Usually, after discussion with the person who used this phrase, we find a way of avoiding the contradiction, eg dropping the "sole and", and perhaps defining "exclusive". Another variant that I have seen in US agreements is that the grant of exclusive rights uses a phrase such as "exclusive (even as to the licensor)" which I have never really liked, but is difficult to object to.
As for finding books that discuss this point, please consider:
Anderson, Technology Transfer (2nd edn 2003, LexisNexis/Tottel, 3rd edn about to be published by Bloomsbury Professional) at section 13.14).
Anderson, Drafting Agreements in the Biotechnology and Pharmaceutical Industries (OUP, loose-leaf, 2009 onwards) at section C.13.40
Anderson & Warner, A-Z Guide to Boilerplate and Commercial Clauses (2nd edn, Tottel Publishing, 2006) at page 246 (chapter headed "Exclusive, non-exclusive and sole")
For a US source, I can't seem to find my copy of Brunsvold on Drafting Patent Licence Agreements, but I would be surprised if he doesn't discuss this point.
Mark: You probably won't be surprised to have me say that I don't find helpful your distinction between "sole" and "exclusive," in that it's magic-wordery. And I don't find 95% comprehension very reassuring. Sorry to be such a nuisance! Ken
Best answer I have found (12 years later)
Thanks Mark
I'm a "licensing type"; you're right.
(I don't recall ever having seen the term sole and exclusive license until just now.)
Keep in mind that exclusive license is potentially ambiguous: Does the licensor itself retain the right to practice the licensed technology, or not?
Ken:
I concur with D.C. I'd also note that "sole" can be ambiguous, depending on context. As D.C. implies, it's best to explicitly state whether the licensor can also use the copyright or whatever.
Chris
Ken, if my memory serves me well, I recall reading in a previous edition of Copinger & Skone James on (English) Copyright Law – that there is indeed a conflict between 'sole' and 'exclusive'. The former means that the licensor will not licence any third party in the territory (while possibly reserving the right for itself to carry out some or all of the activity) whereas the latter means that no party except the licensee may carry out the licenced activity.
The solution, of course, is to use clear words to specify what is intended.
Gil: You'll see from his comment above (it fell down a black hole, and I only just retrieved it), Mark Anderson offers the same distinction. I agree with you that it would be best to state your meaning clearly rather than speak in code. Ken
Ken, just to come back to you on magic-wordery…
It isn't my distinction, it is the generally understood one among European lawyers. Perhaps they are magic words, but then so are agent and distributor, or lease and licence, or assignment and licence, or sell and hire. Some words do have technical meanings. If you are convicted of reckless driving that is more serious than careless driving, although it may not be obvious to the man in the street that reckless is worse than careless. An asset sale is different from a share sale. If people don't understand or have different understandings of the technical terms, then by all means define them in a contract, although I think there are some words that are so core and technical (eg "assignment" of a patent or a "lease" of real property) that I think it is probably inappropriate to define them, and it is up to the draftsman to use the right word to achieve the legal effect.
Mark: Contracts of course contain technical terms. A contract will be as complex and as technical as the transaction that it expresses.
Instead, what concerns me is when the everyday meaning of, as in this case, two different words bears no relation to the distinction between those words that has come into currency in a given legal community.
By contrast, the distinctions you cite don't cause me any concern. Recklessness and negligence have a meaning, for legal purposes, that is broadly consistent with the everyday meaning of those terms. The notion of an asset sale and a share sale are technical terms that have no meaning outside of a legal context, so there's no risk of a disconnect.
Ken
Ken, I agree in principle with what you say. I just feel that sole and exclusive are on the borderline. To my mind, the natural meanings of the words are a little different from one another, and are consistent with correct legal usage. If I grant an exclusive licence, I am excluding myself. If I grant a sole licence, you are the sole licensee, but I am not excluding myself.
Well, that's my best shot at a rebuttal. I wouldn't bet the house on it though!
(And we haven't even got on to co-exclusive licences…:-)
May I (strongly) concur with Mark's first comment?
I think the distinction between 'sole' and 'exclusive' is indeed about the right of the grantor to continue the same and it is my experience that the 5 percent Mark refers to is rather the group of people who have never encountered the distinction before.
I also agree with DC, since I have seen the distinction in thousands of agency and distribution agreements but never in a license. (This would return us readers/commenters to Ken's previous blog addressing the concept of a 'license grant': is a license something spun off of the right-to-use the licensed right (i.e., if a license is exclusive, the right-to-license is exhausted) or instead, is a license that right-to-use itself. As I internalised the former meaning, I should disagree with Mark that a sole license is possible at all.
As a postscript to my earlier comments, I have today taken a 3 hour multiple-choice exam in order to seek accreditation as a Certified Licensing Professional. This qualification has been established by IP licensing managers in the US. As I struggled with some of the 150 questions, I had a momentary smile to myself when one of the questions asked which of four alternatives most accurately described a sole license. Needless to say, I chose the answer most closely representing the views of commentators on this page!
From an Australian perspective, it is wrong to describe "sole and exclusive" as an example of redundancy. Among lawyers, at least, the words have the distinct meanings set out in Mark's post. Nevertheless, I accept Ken's point (and the various comments confirm) that there is ambiguity around the meaning of those words. It makes sense to be clear as to what is intended, whether by defining the relevant term or otherwise.
New here and this conversation is exactly what I was looking for.
After some very brief research, Milgrems has a section on "Sole" liccenses which he defines as similar to they way Mr. Anderson defines the term under UK law: sole licence means that the licensor promises not to license anyone else, but is allowed to exploit himself.
I could not find the answer to my question of whether in the absence of other clarifying langes, and "exclusive" license is exclusive even as to the licensor.
I do have a copy of Brunsvold on Drafting Patent Licence, and although he states that in the absence of a reservation to the contrary, a licensor gives up the granted rights when an "exlcusive" license is granted. It is intersting to note, however, that Brunsvold offers not citation to case law to support this interpretation.
I am now on a quest to find such a case: that an exclusive license is eclusive even as to the licensor in the absence of a reservation to the contrary.
Any help is appreciated.
Black’s law dic , 8th edition, does have the quotation that ‘exlusive’ includes both the discussed scenario. The quotation is ‘3 Am. Jur. 2d Agency s268, at 768 (1986).
sole and exclusive, in this sence, are just the very same. exclusive or sole, each can mean excluding others, but neither can certainly mean excluding the grantor, i.e. does the ‘others’ including the grantor? of course it is not a question on the differnce between sole and exclusive. If there is a practical usage of exclusive (excluding others including grantor) and ‘sole’ (excluding others without including grantor), it is okay. but do not try to differentiate these two words by their definitions. Actually according to the Black’s law dic ‘exclusive’ comtains both discussed meanings.