An exclusive license means that, within the agreed scope, only the licensee may use the trademark — not even the licensor itself. A non-exclusive (ordinary) license allows the licensor to use the mark itself and to license multiple parties at the same time. Between the two lies the sole license: the licensor may use the mark itself but may not license any third party.
Comparison of the Three License Types
- Exclusive license: within the agreed territory and term, only the licensee may use the mark; the licensor may not. The licensee's position is closest to that of the trademark owner, and upon discovering infringement it may sue directly in its own name;
- Sole license: the licensor may use the mark but may not license others. In case of infringement, the licensee may sue jointly with the licensor, and may sue on its own if the licensor does not;
- Non-exclusive (ordinary) license: the licensor may use the mark itself and license multiple parties. In principle, the licensee must obtain the licensor's express authorization to sue.
How to Choose
For the licensee, an exclusive license offers the strongest protection at the highest price, suitable for long-term operation of a core brand; an ordinary license is cheaper and suits lighter cooperation such as franchising and contract manufacturing. For the licensor, an ordinary license preserves maximum flexibility, but quality-control inconsistency among multiple licensees must be guarded against, as it dilutes the brand.
Contract and Recordation Points
- The license type must be stated clearly in the contract; ambiguous typing is a prolific source of disputes;
- Whatever the type, the license contract should be recorded with CNIPA; an unrecorded license may not be asserted against a bona fide third party;
- Exclusive licenses in particular should be recorded and published — this is the key to asserting the license against subsequent assignees;
- Agree on the goods scope, territory, term, quality standards and termination clauses; the term may not exceed the trademark's validity period.
There is no standard answer to which license type to choose — it depends on brand strategy and bargaining positions. Drafting detailed clauses and completing the recordation protects both sides.
If you are unsure about any of the above, you may first apply for license recordation through MyTMBee and act on the analysis provided by a recorded trademark agent.