Hello, this is IPLEX IP Law Firm.
As product competitiveness moves beyond technology to aesthetic value, design has now become a key business asset that influences the product's first impression, consumer choice, and brand image.
Even if you do not use your designs yourself, you can license them for manufacturing or collaboration with external partners. Non-exclusive design licensesplay an important role in these arrangements.
However, design right has a different institutional nature than patent or trademark, which can lead to unexpected disputes if the general contract form is applied as is.
This article explains the basic concept of a non-exclusive design license and the key practical considerations.
What is a non-exclusive design license?
A non-exclusive design license allows a third party to use a registered design within an agreed scope. Ownership of the design right remains with the design owner.
The design owner may continue using the design and may license the same design to multiple businesses. Non-exclusive design licenses are often used in the following situations:
- Outsourced Manufacturing (OEM) Structure
- Co-branded Product Development
- Design License Business
- A company with no production capacity but design assets
The legal nature of a non-exclusive design license
The license does not transfer the design right itself. It gives the licensee a contractual right to use the design within the agreed scope.
- Limits on use: Use outside the agreed products, term or territory may infringe the design right, even if the user holds a non-exclusive license.
- Limits on enforcement: A non-exclusive licensee generally cannot independently enforce the design right against third-party infringers. Enforcement should be pursued through the design owner.
A non-exclusive design license is therefore a limited right to use a design under the owner's control,rather than ownership of the design right itself.
Entering into a non-exclusive design license agreement
Things to Note
Many disputes over non-exclusive design licenses arise from unclear contractual terms.
The contract must at least reflect the following.
- Specific Designs
The registration number must be clearly stated, and the presence of a separate registered partial design or related design must be checked in advance.
- Product scope
Specify whether the license covers all products using the design or only particular products.
- Allowed design changes
The design changes the feel only by making subtle changes in color, size, material, and proportion. You need to determine how much variation you want to allow.
- Area, Period and Scope of Use
Prevent abuse of rights by specifying possible countries, durations, quantity of production, and sales channels (on/offline).
- Sublicensing
Clarify whether the licensee may authorize third parties to use the design or subcontract production.
- Obligations on termination
Specify when production must stop, how remaining inventory will be handled, and how manufacturing molds and digital files must be returned or destroyed.
Non-exclusive design licenses and registration
A non-exclusive design license takes effect by agreement. Registration is important for making the license enforceable against third parties.
If the design right is later assigned to a third party, an unregistered license may be difficult to assert against the new owner. To protect business continuity, registration should be treated as a key safeguard..
How to register an exclusive design license
- Required Documents
1 Application for registration of the license
2. License agreement or written authorization
3. Seal certificate of the registration obligor, issued within the preceding six months
④ Consent form, where a co-owner's consent is required
- registration fee
Total payment : KRW 43,000
Professional fees: Vary by firm.
Design licensing is not just a matter of borrowing a design, it is a legal and business agreement that shares the appearance and market perception of a product.
Clear contractual terms support stable business expansion. Poorly drafted terms can undermine the design's value or lead to disputes.
If you are planning to expand your business in a safe and strategic manner through a design license, be sure to clearly design your rights scope and management structure through expert review before entering into a contract.
This article reflects the information available when it was published. Contact us to discuss your circumstances.