How a patent is used matters as much as obtaining it. If you cannot manufacture a product yourself, or want to use another company’s technology lawfully, a non-exclusive patent license is one option to consider.
Non-exclusive licenses are widely used, but misunderstanding their legal nature or contractual terms can lead to unexpected disputes.
This guide explains the key practical considerations for non-exclusive patent licenses.
What is a non-exclusive patent license?
A non-exclusive patent license is a non-exclusive right to work a patented invention within the scope established by a contract with the patent holder or by law.
- Legal Status
A non-exclusive license grants a right to use an invention while the underlying patent remains with its owner.
It is similar to a tenant obtaining the right to operate a business in a building while the landlord retains ownership.
- Relationship with the patent holder
The patent holder retains ownership and earns royalties, while the licensee gains an opportunity to commercialize the technology.
- Type
The most common form is a non-exclusive license granted by agreement between the parties. Statutory non-exclusive licenses also arise under the Patent Act in certain circumstances, including employee inventions.
Key feature of a non-exclusive license: no exclusivity
The defining feature of a non-exclusive license is that it does not confer exclusivity.
A patent owner may grant a non-exclusive license to Company A and also license Companies B and C. No licensee is guaranteed sole use of the technology.
Can a non-exclusive licensee grant a sublicense to a third party?
In principle, the patent holder’s express consent is required. Granting a sublicense without contractual permission may breach the contract or infringe the patent.
Non-exclusive and exclusive patent licenses: how do they differ?
Non-exclusive licenses are often compared with exclusive licenses.
An exclusive license grants one licensee the right to work the invention within a defined scope. Even the patent owner cannot work it within that scope. Establishing and managing such a right requires greater formality.
A non-exclusive license may be granted to several licensees. It supports flexible business expansion, but generally does not allow a licensee to bring an infringement action independently.
| Category | Exclusive patent license | Non-exclusive patent license |
| Property | Right in rem | Contractual right |
| Exclusivity | Yes. | None |
| How the scope is defined | Agreement and registration of the license | Agreement between the parties |
| When the license takes effect | Date of license registration | Date of the agreement (Registration is required for enforceability against third parties.) |
| Claim for damages | possible | Not available |
| Registration Required | Required | Optional; recommended for enforceability against third parties |
Contract terms to check when granting a non-exclusive license
Many disputes arise from unclear contractual terms. The following should be specified:
- Scope of use: Specify the territory, duration and permitted activities, such as manufacture or sale.
- Royalties: Specify whether royalties are a lump sum, running royalties or a combination.
- Ownership of improvements: Who owns improvements made by the licensee while using the technology? The agreement should make this clear to avoid later disputes.
- Terms of termination: The agreement should provide for prompt termination if royalties are overdue or the technology is used outside the agreed scope.
- Processing after termination of contract:Specify how long remaining inventory may be sold after the agreement expires, and require the return of technical materials and immediate cessation of use to prevent later disputes.
Vague terms increase the risk of disputes.
Is it okay not to register?
Importance of “Registration”
A non-exclusive license takes effect between the parties by contract. Registration with the patent office is nevertheless strongly recommended so that the right can be asserted against third parties.
For example, if the patent is assigned to a third party while the licensee is using it for business, registration enables the licensee to assert the license against the new patent holder.
If you are not registered, in extreme cases, the risk of the business itself being discontinued cannot be ruled out.
Registering a non-exclusive patent license
Once the agreement is finalized, apply to register the license with the patent office to secure enforceability against third parties.
- Required Documents
1 Application for registration of a license
2. License agreement or written authorization
3 Seal certificate of the party granting the license, issued within six months
④ Consent form, where a co-owner's consent is required
- registration fee
Agent’s fees vary by law firm.
Official fee: KRW 43,000 per registration
Strategy from a business perspective
It becomes a powerful business tool when used strategically.
- Profit Diversification:Even a company without manufacturing facilities can earn stable royalties by licensing valuable patents non-exclusively to several companies.
- Standardization Strategy:To promote a technology as a market standard, a company may grant affordable non-exclusive licenses to many businesses and expand adoption.
- Risk Management: Cross-licensing allows companies to use each other's patents and may help resolve a dispute or reduce litigation risk.
Non-exclusive licensing can connect technology with the resources needed to commercialize it. However, misunderstanding the legal nature of the license or its contractual terms can put technical assets at risk or lead to disputes.
Before entering into a non-exclusive license agreement, obtain expert review and clearly define the rights to support a successful technology business.
This article reflects the information available when it was published. Contact us to discuss your circumstances.