Intellectual Property Licenses

Software Licenses

Proprietary Licenses

Proprietary software licenses, also known as closed-source licenses, restrict access to the software's source code and limit how the software can be used, modified, or distributed. Under these licenses, the software is owned by an individual or company, and users are granted limited rights to use the software under specific conditions.

Characteristics

• Restricted Access: Users cannot access or modify the source code.
• Usage Limitations: Licenses often specify how and where the software can be used.
• No Redistribution: Users are typically prohibited from redistributing the software.

Examples

Microsoft End User License Agreement (EULA): This license outlines the terms under which users can use Microsoft's software products. It typically restricts copying, modifying, or redistributing the software.

Oracle License: Oracle's licensing agreements define how their software can be used, often including restrictions on usage in virtualized environments and specifying licensing metrics for different deployment scenarios.

Oracle

Implications

Proprietary licenses can lead to vendor lock-in, where users become dependent on a single provider for software and support. This model can limit innovation and flexibility, as users cannot modify the software to suit their specific needs.

Shared Source Licenses

Shared source licensing represents a hybrid model that sits between proprietary (closed) and open-source licensing. Coined and popularized by Microsoft in the early 2000s, shared source allows select individuals or organizations to view and sometimes modify the source code of software, but under more restrictive terms than those found in open-source licenses.

Characteristics

Unlike open-source software, shared source is not available to the general public. Access is typically granted to specific partners, educational institutions, or government entities.

• View and Modify: Some shared source licenses permit viewing only (no modifications), while others allow limited modification and redistribution within strict boundaries.
• Retention of Control: The software owner retains full rights over the source code and can dictate who can access it, how it can be used, and whether it can be redistributed.

Examples

Microsoft’s Shared Source Initiative includes licenses like:

Microsoft Reference Source License (MS-RSL): View-only for reference purposes.

Microsoft Limited Permissive License (MS-LPL): Allows some modifications and redistribution under controlled conditions.

Microsoft Limited Community License (MS-LCL): Allows changes but only within a particular community (e.g., non-commercial developers).

Use Cases

Shared source is often used when software vendors want to provide transparency (e.g., to governments for audit purposes), allow limited customization (e.g., by OEMs), or promote academic learning—while still maintaining tight control over intellectual property.

Innovation and Lock-In

This model can support innovation within a defined ecosystem (e.g., allowing hardware manufacturers to tailor drivers) but does not enable the same community-driven innovation seen in open-source projects. It maintains potential for proprietary lock-in, since recipients cannot freely distribute or fork the codebase.

Open Source Licenses

Open-source licenses allow users to access, modify, and distribute the software's source code. These licenses promote collaboration and sharing, fostering innovation and community-driven development. Open-source licenses are generally divided into two categories: permissive and copyleft.

Permissive Licenses

Permissive licenses impose minimal restrictions on how the software can be used, modified, and redistributed. They allow proprietary use of the software, meaning that modified versions can be distributed under different terms, including closed-source licenses.

Examples

MIT License: A simple and permissive license that allows reuse within proprietary software, provided that the license is included with the software.

BSD License: Similar to the MIT License, it permits redistribution and use with minimal restrictions.

Apache License: Similare to the MIT and BSD licenses Apache License 2.0 is a permissive open-source license. It allows users considerable freedom to use, modify, and distribute the software with minimal restrictions.

Copyleft Licenses

Copyleft licenses require that any modified versions of the software also be distributed under the same license terms. This ensures that the software and its derivatives remain free and open.

Example

GNU General Public License (GPL): A widely used copyleft license that mandates that derivative works be licensed under the GPL as well, ensuring that the software remains free and open for future users.

Implications

Open-source licenses encourage transparency, collaboration, and rapid innovation. They allow developers to build upon existing work, reducing duplication of effort and fostering a community-driven approach to software development. However, the choice between permissive and copyleft licenses can influence how the software is used in commercial settings. Permissive licenses may be more attractive to businesses seeking to incorporate open-source code into proprietary products, while copyleft licenses ensure that improvements remain open and accessible to the community.

Creative Works Licenses

Creative works licenses govern how content such as music, writing, photography, film, art, and other expressive works can be used, shared, modified, and distributed. These licenses are foundational to the modern creative economy, balancing the rights of creators to control their work with the public’s ability to access and reuse it. The most common framework for these licenses is Creative Commons (CC), though other forms like rights-managed and royalty-free licenses are also used widely in media, publishing, and entertainment.

Creative Commons Licenses Creative Commons (CC) is a globally recognized suite of licenses designed to offer a standardized way for creators to grant the public permission to use their work under specified conditions. These licenses were developed to provide a middle ground between full copyright (where all rights are reserved) and the public domain (where no rights are reserved).

There are six main Creative Commons licenses, each providing different levels of openness:

1. CC BY (Attribution) This license allows others to distribute, remix, adapt, and build upon the work—even commercially—as long as they credit the original creator. It is the most permissive CC license short of dedicating the work to the public domain.

2. CC BY-SA (Attribution-ShareAlike) Similar to CC BY, but derivative works must be licensed under identical terms. This license is often used by Wikipedia and encourages the continued sharing of derivative works.

3. CC BY-ND (Attribution-NoDerivs) This license allows for redistribution, both commercial and non-commercial, as long as the work is unchanged and credited. No derivatives or adaptations are allowed.

4. CC BY-NC (Attribution-NonCommercial) This license lets others remix, tweak, and build upon a work non-commercially, and although new works must acknowledge the creator, they don’t have to be licensed on the same terms.

5. CC BY-NC-SA (Attribution-NonCommercial-ShareAlike) This license combines the non-commercial requirement with the ShareAlike clause. Derivatives must be licensed under the same license and cannot be used for commercial purposes.

6. CC BY-NC-ND (Attribution-NonCommercial-NoDerivs) The most restrictive CC license, it allows others to download and share the work with attribution but prohibits any changes and any commercial use.

Public Domain Dedication (CC0) This is not a license but a waiver. The creator forfeits all copyright and related rights, dedicating the work to the public domain for any use without permission or attribution.

Other Creative Work Licenses

[Media:https://www.gettyimages.com/eula Rights-Managed (RM)] Rights-managed licenses are traditional commercial agreements typically used in the licensing of images, videos, or music. The license terms specify exact parameters such as:

• Duration of use
• Geographic territory
• Type of media (print, digital, broadcast)
• Scope of distribution

Each use of the work requires a separate license, and pricing varies based on the scope. This model is common in advertising and editorial publishing.

[Media:https://www.gettyimages.com/eula Royalty-Free (RF)] Despite its name, “royalty-free” does not mean “free of cost.” It means that once a one-time licensing fee is paid, the user can use the content without additional royalties for each use. These licenses allow for broad usage, often including commercial purposes, but may still include some restrictions like resale or redistribution.

Royalty-free content is widely used in marketing, video production, and web development, due to its affordability and flexibility.

[Media:https://www.gettyimages.com/eula Rights-Ready (RR)] Rights-Ready licenses are similar to Rights-Managed licenses but offer fixed prices for specific use categories, while Rights-Managed licenses are priced based on the details of how, where, and for how long the content will be used.

Impact on Creativity, Innovation, and Access

These licensing models greatly influence how content is created, shared, and consumed:

Creative Commons licenses empower creators to voluntarily share their work with the public, stimulating education, culture, and innovation. They allow academic, nonprofit, and artistic communities to legally use and build upon existing content, reducing the friction associated with traditional copyright restrictions.

Rights-managed and Rights Ready licenses maintain strong protections for professional creators, such as photographers and filmmakers, who need precise control over how and where their works are used. This model helps ensure fair compensation but can limit access due to cost or complexity.

Royalty-free licenses offer a commercial compromise: affordable, broad access for consumers, while creators still get paid. However, they can dilute the uniqueness of a creative work, as the same content may appear in many unrelated contexts.

Balancing Protection and Sharing

The broader spectrum of creative work licenses reflects the diverse needs of creators and users in the digital age. Some creators prioritize broad dissemination and social good, aligning with open licenses like CC BY or CC0. Others seek financial return and brand control, relying on rights-managed or commercial Creative Commons variants.

Ultimately, licensing strategy shapes not only how content circulates in the world, but also how knowledge, culture, and expression evolve. A well-informed approach to creative licensing helps ensure that both creators and the public benefit from the transformative potential of the arts in a digital society.

Patent Licenses

A patent license is a legal agreement in which the patent owner (licensor) grants permission to another party (licensee) to use, make, sell or otherwise exploit the patented invention. Think of it as a “permission slip” allowing the licensee to practice the inventor’s exclusive rights under the patent. Licenses can be structured in different ways – most fundamentally as exclusive, non-exclusive, or compulsory. Each type has distinct legal effects and practical implications for how the technology is used in industry.

Exclusive Licenses

An exclusive license gives the licensee the sole right to use (and often commercialize) the patented invention in a defined territory or field. In other words, the licensee becomes the only party allowed to exploit the patent – and the licensor cannot grant any other licenses or use the patent themselves in that scope. For example, a pharmaceutical company might grant an exclusive license to a drug manufacturer to produce and sell a patented medicine in North America. During the term of that license, even the original patent holder (the licensor) may be barred from marketing the product in that region. Exclusive licenses are often tailored with special provisions or carve-outs: for instance, a university licensing a patent might reserve the right to continue research on the invention even if it grants an exclusive commercial license to industry.

Key features: Only the named licensee can use the patent in the licensed field or territory. No other party – not even the licensor – may practice the patent rights in that scope. Exclusive licenses frequently include higher royalty payments or up-front fees, reflecting the competitive advantage given to the licensee. License agreements often impose strong development or diligence obligations on the exclusive licensee, since the patentee relies on that one licensee to exploit the invention.

Benefits: An exclusive license gives the licensee a protected market position. Because they have a monopoly on the invention in the agreed territory, licensees are more likely to invest heavily in development, manufacturing and marketing. For example, a tech firm granted an exclusive license to an innovative algorithm will often commit substantial R&D and promotion to ensure the product succeeds. For the licensor, exclusivity can command higher royalties and revenues, since exclusivity is valuable.

Risks: The licensor becomes dependent on a single partner. If the exclusive licensee fails to commercialize the invention effectively, the technology may remain unused, and the licensor has little recourse. Also, exclusivity inherently limits market reach: only one company sells the product, so consumers may see higher prices or fewer product choices. (For instance, exclusive licensing of an eco-friendly packaging patent to just one manufacturer could limit its adoption across industries.)

Example: A typical case is in pharmaceuticals. Imagine a biotech firm patents a new drug and grants an exclusive license to a contract manufacturer for Europe. The manufacturer alone can produce and sell the medicine there; the patent owner cannot license the drug to any other company in Europe during the term. This arrangement motivates the licensee to invest in clinical trials, regulatory approval and distribution channels, knowing it has no direct competition for that patented drug.

Non-Exclusive Licenses

By contrast, a non-exclusive license allows the patent owner to grant the same rights to multiple licensees. The licensor can continue to use or license the patent to others without restriction. In practice, non-exclusive licensing means any number of companies may pay royalties and sell products based on the patented technology. For example, the holder of a patent on a new battery design might license it non-exclusively to several electronics manufacturers, each incorporating the battery into their products.

Key features: The licensor retains freedom to use the patent and to license it again. Each licensee pays for a right to use the invention, but none has sole control. Non-exclusive licenses are common in industries that favor wide dissemination of technology, such as information technology and standardized products.

Advantages: Non-exclusive licensing broadens market penetration. Because the licensor can partner with many companies, the technology tends to diffuse widely and adoption grows faster. For instance, licensing a patented material to multiple construction firms can lead to widespread use in various projects, boosting overall sales of the technology. Multiple licensees provide diversified revenue streams for the licensor – so the inventor earns royalties from various sources rather than relying on a single party. Increased competition among licensees can drive prices down for consumers and spur further improvements on the technology.

Considerations: Since licensees compete, the per-license payment is usually lower than for an exclusive deal. The licensor must also manage multiple agreements and ensure each licensee meets quality standards. Non-exclusive licenses may include volume or performance targets for each licensee, but enforcement is generally less burdensome than maintaining an exclusivity pledge.

Example: In technology standards, non-exclusive licensing is the norm. For example, once the industry agrees on a wireless protocol (like 4G or Wi-Fi), patent holders must license their standard-essential patents on fair, reasonable, and non-discriminatory (FRAND) terms to all implementers. This ensures that every smartphone or laptop maker can use the patented technology. Similarly, patent pools (e.g. MPEG-LA for video codecs) grant non-exclusive licenses to any interested company. A practical illustration: a university patents a new photovoltaic material and non-exclusively licenses it to multiple solar panel manufacturers. Each company can build the same solar cells, increasing the material’s impact and bringing down solar power costs through competition.

Compulsory Licenses

A compulsory license is fundamentally different: it is not a voluntary deal between patentee and licensee, but a legal imposition by the government or a court. Under a compulsory license, a patent owner is forced to grant permission to others (or the government itself) to use the patented invention, without the patentee’s consent. In return, the law requires the user to pay royalties – often set by statute or determined by a court – to the patent owner. This mechanism is an exception to normal patent rights, designed to prevent abuses and serve the public interest.

Legal basis: Internationally, compulsory licensing is authorized under Article 5A of the Paris Convention and detailed in Article 31 of the WTO’s TRIPS Agreement. TRIPS explicitly allows member countries to issue compulsory licenses for any patent (including medicines or technology) under specific conditions. It generally requires that the government first seek to negotiate a voluntary license with the patent owner on reasonable terms. If that attempt fails within a reasonable time, a compulsory license may be granted. Crucially, even after a compulsory license is granted, the patent owner must be paid “adequate remuneration” for the authorized use. Moreover, TRIPS mandates that compulsory licenses be non-exclusive and usually confined to domestic markets, unless special export provisions apply. (For example, an exporting country can issue a compulsory license to supply medicines to countries lacking manufacturing capacity under TRIPS Article 31bis.)

When used: Compulsory licenses are typically invoked in cases of national emergency, anti-competitive abuses, public health crises, or when the public’s need is not met by the patentee. They have most often appeared in the pharmaceutical sector. A famous example is India’s 2012 decision to grant its first compulsory license – to Natco Pharma for Bayer’s cancer drug Nexavar (sorafenib). In that case, India’s patent law (amended in light of TRIPS) allowed a compulsory license because the drug was unaffordable for most patients. As a result, Natco was able to sell a generic version at roughly 3% of the original price, greatly improving access to the medicine. Governments can also use compulsory licenses defensively: during the 2001 anthrax scare, the U.S. government threatened to issue a compulsory license on Bayer’s antibiotic Cipro unless the price was cut, an action that led Bayer to lower its price without a license being formally granted.

Mechanics: A compulsory license is typically non-exclusive: once issued, it may allow multiple manufacturers to produce the patented product, ensuring competition and supply (this is in line with Paris Convention Article 5A’s aim to prevent abuse of monopoly). For example, after India issued the sorafenib license, other generic makers could also potentially supply the drug (subject to patent law conditions), instead of Bayer alone controlling the market. Governments also use related mechanisms: in the United States, there is no general compulsory licensing law, but the government has a “government use” right under 28 U.S.C. §1498. This statute allows the U.S. (or its contractors) to use any patented invention for public purposes, provided the patent owner can sue for “reasonable and entire compensation”. In effect, 28 U.S.C. 1498 acts like a compulsory license with set compensation, and it has been used to allow federal agencies to acquire patented technologies (often in defense or health) without the patentee’s consent.

Sectoral Usage and Examples

Patent licensing practices vary by industry:

Pharmaceuticals: Patent rights are especially valuable in pharma due to high R&D costs and regulatory barriers. Innovators often use exclusive licenses to partner with large drug companies or contract manufacturers who can invest in costly trials and production. For example, an exclusive license might be given to one company to sell a drug in a new market. After patents expire (or under special exceptions), non-exclusive licenses prevail: multiple generic manufacturers are free to produce off-patent drugs, driving prices down (this is simply patent exhaustion rather than a license, but the effect is similar to broad licensing). Compulsory licenses have been used in public health: beyond the Indian sorafenib case, countries like Thailand and Brazil have issued compulsory licenses for essential medicines (e.g. HIV/AIDS drugs) to improve access. These actions drew political controversy but underscore the balance between patents and public welfare.

Technology and Software: In high-tech industries, non-exclusive licensing is very common. Companies typically license software algorithms, hardware designs, and standards widely. For instance, smartphone technologies protected by patents are often licensed on FRAND terms to all device makers, ensuring interoperability and competitive markets. Patent pools (e.g. for video codecs or wireless standards) exemplify pooled non-exclusive licensing: dozens of patent owners allow any company to join the pool and license the technology. Exclusive licenses in tech are rarer but do occur, for example when a startup exclusively licenses a new chip design to a single chipmaker for a given application. Compulsory licensing in tech is unusual, but analogous concepts appear in antitrust remedies: a court might order a patent holder to license certain technology to competitors if it finds the patent has been used to monopolize a market (this happened in some U.S. cases under antitrust law, though not under patent law per se). During crises, governments have floated compulsory licensing proposals even for tech products (e.g. pandemic-related technologies), but no major non-health tech compulsory license has been implemented globally.

Manufacturing and Other Industries: Industries like automotive, chemicals, and machinery also rely on patent licenses. For example, a patented manufacturing process might be licensed exclusively to a single factory or joint venture, or non-exclusively to multiple licensees. In automotive, it’s common for firms to cross-license patents non-exclusively to allow competition and standards (e.g. multiple carmakers using a patented engine component design). Exclusive licenses may be used in cases like technology transferred within a joint venture. Compulsory licenses here are very rare; governments generally use regulatory or antitrust powers instead. However, legal tools like 28 U.S.C. 1498 show that, in principle, authorities can compel use of patented technologies for public purposes even outside pharma (e.g. defense manufacturing).

Impact on Innovation, Competition, and Access

The choice of license type affects innovation, market competition, and access to technology:

Innovation incentives: A strong patent monopoly (via exclusivity) can encourage investment by promising the licensee undisturbed returns. Exclusive licenses often spur the licensee to innovate further around the patented invention. However, they can block others from building on the technology, potentially slowing broader innovation. By contrast, non-exclusive licensing tends to spread knowledge and spur incremental innovation by allowing many parties to experiment and improve the technology. Compulsory licensing, being an exception, is meant to balance incentives with public need. Some critics argue compulsory licenses discourage investment by weakening patent protection, but proponents note that well-designed compulsory regimes (with fair compensation) serve as a “safety valve” without eliminating incentives. Indeed, TRIPS ensures patent holders still earn royalties, even under compulsory use.

Market competition: Exclusive licenses confer a temporary monopoly on the licensee, which can limit competition in the licensed market. Competition authorities often scrutinize such deals under antitrust rules. Non-exclusive licenses, by allowing multiple licensees, naturally foster competition: several companies can enter the market with the patented product or technology, often leading to lower prices and more choices for consumers. Compulsory licenses explicitly break monopolies in defined circumstances: for example, by authorizing generic production of a patented drug, competition in that drug’s market jumps. Thus, compulsory licensing is often viewed as a pro-competition tool when patent exclusivity is deemed harmful to public welfare.

Access to technology: An exclusive license can restrict access since only the chosen licensee supplies the market. Non-exclusive licensing generally widens access, as more suppliers are authorized. Compulsory licensing is specifically aimed at improving access to important technologies (notably medicines). For instance, India’s compulsory license enabled many more cancer patients to afford sorafenib. During the COVID-19 pandemic, the idea of compulsory licenses (or TRIPS waivers) for vaccines and treatments was championed to ensure global access, illustrating how this legal tool can be used in emergencies.

Patent licenses are powerful legal instruments that shape how inventions reach the market. Exclusive licenses create a single-path commercial strategy for a patent, driving focused development but restricting diffusion. Non-exclusive licenses encourage multiple players to use and improve the invention, increasing reach and competition. Compulsory licenses, used rarely and under strict conditions, override patent exclusivity to serve urgent public interests (e.g. public health) while still compensating the inventor. Together, these licensing mechanisms help balance the patent system’s dual goals: rewarding innovation and ensuring that society benefits from new technologies. Sources: Patent law and licensing practices as described by WIPO and legal experts, and real-world examples reported in industry literature.

Trademark Licenses

A trademark license is a legal agreement that allows one party (the licensee) to use the trademark owned by another party (the licensor) under specific terms and conditions. Trademarks are valuable intellectual property assets that represent the brand identity of goods or services. By licensing a trademark, the owner does not relinquish ownership but rather grants limited rights of use to another party, typically in exchange for royalties or fees. Two important forms of trademark licenses are franchise agreements and merchandising licenses—each serving distinct purposes and industries.

Franchise Agreements: Trademark Licensing Within a Business Model

Franchise agreements are perhaps the most structured and complex form of trademark licenses. In a franchise, the franchisor (the trademark owner) allows a franchisee to operate a business using its trademark, trade name, and often a complete system of business operations. This model is common in the fast-food, hospitality, and retail industries—well-known examples include McDonald’s, Marriott, and 7-Eleven.

The cornerstone of a franchise agreement is the license to use the franchisor’s trademarks. This use is tightly regulated to ensure uniformity and brand consistency across all franchise locations. The franchisee agrees to operate under the franchisor’s prescribed system, often covering everything from store layout and employee training to supplier selection and advertising strategies. In return, the franchisee benefits from the established reputation and recognition of the franchisor's brand, along with the support of a larger organization.

Because the reputation of a brand can be affected by the conduct of any individual franchisee, franchisors maintain close oversight and enforce rigorous quality control measures. This distinguishes franchise trademark licenses from simpler licenses by adding a layer of operational integration. It also ensures that the consumer experience is consistent, no matter which franchise location a customer visits.

Merchandising Licenses: Trademarks on Products

Merchandising licenses represent a different use case for trademarks. These licenses allow third parties to place a trademark, logo, character, or brand name on products, even though the licensor may not be in the business of manufacturing or selling such products directly. This type of license is especially prevalent in the entertainment, sports, and fashion industries.

For example, a company that owns the trademark rights to a popular movie franchise might license the right to print its characters and logos on lunchboxes, T-shirts, toys, or video games. Similarly, a sports league might license team logos to be used on apparel or memorabilia. The licensee produces and sells these products, while the trademark owner receives royalties or other compensation in exchange for the brand’s use.

Merchandising licenses are not only a revenue stream but also a way to enhance brand visibility and fan engagement. However, like franchise agreements, they must include quality control provisions. If the licensed goods are of poor quality or otherwise misrepresent the brand, the trademark’s reputation can suffer. U.S. trademark law requires licensors to exercise quality control over licensed products to avoid the risk of “naked licensing”—a legal term for when a trademark owner fails to maintain control, thereby potentially weakening or forfeiting the trademark’s protection.