Sublicensering

Sublicensering is a contractual arrangement where a licensee, who has been granted rights to use intellectual property, further grants some of those rights to a third party. This is distinct from a direct license from the original licensor. The original license must explicitly permit sublicensing for this to be legally permissible. Without such authorization, the licensee is in breach of their original agreement.

The sublicensee obtains rights from the licensee, not directly from the original owner of the intellectual property. The scope of rights granted to the sublicensee is typically limited by the terms of the original license. The licensee acts as a licensor to the sublicensee, but their own rights are still bound by the original agreement with the licensor. This means the sublicensee's rights are dependent on the validity and continuation of the original license.

Common reasons for sublicensing include expanding market reach, enabling specialized use of technology, or allowing a large organization to distribute licensed rights to its various divisions or subsidiaries. It is a mechanism that facilitates the broader dissemination and application of intellectual property while ensuring that the original licensor maintains control through the terms of the initial license. The original licensor may also receive royalties or fees from the licensee based on the sublicensing activity.