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The effect of an industrial property right is that the protective right holder alone is authorised to use the protected object. It can however be stipulated by a licence agreement that the holder (licensor) also grants rights of use to a third party (licensee). The nature and scope of the granted authorisation are subject to contractual freedom and are therefore freely negotiable.

A distinction is made between a non-exclusive and an exclusive licence. In the case of the non-exclusive licence, the licensee usually only possesses a right of use. The licensor is entitled to use the object itself and to grant further non-exclusive licences. In contrast, in the case of the exclusive licence, the licensee can independently assert all the rights resulting from the given law (e.g. the right of prohibition, granting of non-exclusive licences). He therefore takes the place of the holder of the protective right. Depending on the contractual conditions, this can even extend to a situation where the licensor itself may no longer use the object.

The use of the protective right can be granted unrestricted or restricted in the licence agreement. In the case of the restricted grant, a temporal, geographical and/or subject-matter restriction can in particular be stipulated. A temporal restriction (time licence) arises through a shortening of the term of the agreement, which as a rule ends with the lapse of the protective right. An example of a geographical restriction (territorial or regional licence) would be if the right of use were granted only for a federal Land, e.g. Baden-Württemberg. A subject-matter restriction exists when the licence agreement permits only a type of use, e.g. only the production (production licence) or the marketing (marketing licence), or the production only up to a maximum quantity is permitted (quotient licence).

The main obligation of the licensee usually lies in the payment of licence fees. In principle, the evaluation of the licensed object depends on the branch and the use. The remuneration can take the form of a lump-sum fee, a turnover- or parts-related licence, profit participation or other monetary payments. It is often agreed within the scope of the licence agreement that the licensee will make a one-off up-front payment to the licensor. It is also negotiable for the licensee to assume the protective right costs occurring.

The licence agreement usually represents a certain risk for the licensor and for the licensee, since the existence of the protective right may be uncertain. It may turn out that the protective right does not exist, or that the protective right is removed retrospectively, for example due to an action for revocation. Since the licensee has however been able to use the protective right up to this time without hindrance, it cannot usually demand the return of the licence fees that it has paid.

As can be seen from the illustration, licences are a very complex technical area. In order to avoid nasty surprises, licence agreements should not therefore be concluded without taking advantage of a patent attorney's experience.

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