Sublicensing: Overview, definition, and example
What is sublicensing?
Sublicensing refers to the process by which a party that holds a license (the licensee) grants a third party (the sublicensee) permission to use the licensed rights, subject to the terms of the original license agreement. This is commonly seen in intellectual property agreements, such as software, trademarks, and patents, where the original licensor allows sublicensing as part of the agreement.
For example, a software company that holds a license to distribute a product may grant sublicenses to resellers, allowing them to sell the software under specific conditions.
Why is sublicensing important?
Sublicensing is important because it allows businesses to expand the use of licensed rights while maintaining control over how they are used. It enables licensees to distribute or monetize the licensed material through third parties while ensuring compliance with the original agreement.
For licensors, defining sublicensing terms in an agreement helps protect intellectual property rights, control quality, and ensure proper revenue-sharing arrangements. For licensees, the ability to sublicense can create new business opportunities and increase market reach.
Understanding sublicensing through an example
A film production company licenses the rights to a popular movie from a major studio. The agreement allows the production company to sublicense the film to streaming platforms and television networks, enabling them to distribute the film while ensuring compliance with the original licensing terms.
In another case, a tech company obtains a patent license for a new type of battery technology. The agreement permits sublicensing, allowing the tech company to grant sublicenses to manufacturers, enabling them to produce batteries based on the patented technology.
Example of a sublicensing clause
Here’s how a sublicensing clause might appear in a contract:
“The Licensee shall not sublicense, transfer, or assign any rights granted under this Agreement without the prior written consent of the Licensor. Any approved sublicensee shall be bound by the same terms and conditions as set forth in this Agreement, and the Licensee shall remain responsible for compliance.”
Conclusion
Sublicensing allows a licensee to grant third parties the right to use licensed intellectual property, products, or services under specific conditions. This provision is valuable for expanding market reach while maintaining control over the licensed rights. A well-drafted sublicensing clause ensures that sublicensing arrangements comply with the original license agreement and protect the interests of all parties involved.
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.