A Detailed Study of IPR Licensing in India

Introduction

In today's corporate world, intellectual property rights (IPR) have become essential for fostering a significant amount of growth, creativity, and innovation. Etymologically, the word “License” is derived from the Latin term “Licentia, " which means “liberty or freedom”. Simply put, it grants authority to an individual to use another's property. Conversely, the World Intellectual Property Organisation (WIPO) defines intellectual property (IP) as follows: “Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names, and images used in commerce. "[1] The main aim of the IPR is to protect an individual’s ideas arising from the innovation, new invention, or creativity from any exploitation caused by unauthorised use.

Licensing is a means by which an owner grants permission to make, use, sell, or embody any other rightful work to another person through a contract. A licensing agreement does not differ much from simple contractual agreements, as they are executed between the two parties, who are bound by certain terms and conditions made during the agreement. Each party must adhere to the given conditions, and if any of the parties do not adhere to the conditions, then would lead to an infringement of the IPR Licensing. The rights that are provided through licensing are guaranteed under the Patent Act of 1970, the Trademarks Act of 1999, the Indian Copyright Act of 1957 and the Designs Act of 2000.

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Types of Intellectual Property Licensing Agreements

1)    Exclusive License

During the agreement, no other party is permitted to use or exploit the available intellectual property rights of the licensed asset. In this type of agreement, only the licensee has the exclusive right to commercialise, sell, authorise, exploit, or distribute licensed IP assets within a specific territory. They can also exclude the rights of other licensors from using or prohibiting any right to exploit the asset within a particular territory or globally. Regarding the specific area of jurisdiction, it is crucial to determine to what extent exclusive licensing can be exercised or enforced. Generally, in the case of territorial licensing, foreign entities grant exclusive rights primarily to Indian companies to mitigate the risks of entering a new market while also providing some leverage simultaneously.

The most common exclusive licensing agreements are the Copyright Agreement, Trademark Agreement, and Patent License Agreement.

2)    Non-Exclusive License

In this type of agreement, the licensor allows or grants multiple numbers of licenses simultaneously and also at the same time, keeps open the scope of these rights for the exercise of use by the other third party of the licensed assets. Such licenses neither preclude the ability of the licensor to make any similar agreements nor bestow any exclusivity with third parties.

3)    Co-Exclusive License

In this special kind of agreement, the licensor grants more than one license to the licensee to facilitate the use and management of the licensed asset but imposes limitations or restrictions upon the number of licenses which has to be granted by the licensee to third parties. The number of licenses that are permitted has already been decided during the time of rectification of the agreement or when the two parties came into the contract.

4)    Sole License

This type of licensing agreement arises when the licensor grants the licensed asset only to a single licensee within a specific jurisdiction and also, if they wish, can retain their intellectual property rights. Here, the licensee to whom the right is been granted has only been authorised to use, sell, or prohibit completely from licensing the given rights to any other person. Unlike the exclusive licensing agreement, the only difference between these two is that the licensee can retain their intellectual property rights.

5)    Compulsory License

A Compulsory Licensing Agreement empowers third parties to use the licensed IP rights of the licensor (specifically copyright owner) under certain specified conditions, for promoting the public requirements, such as unpublished works of unknown authors or for the benefit of the disabled[2], or promoting anti-competitive practices.

Usually, licenses combine several of these types, such as granting exclusive rights licenses for intellectual property in a certain area. Furthermore, intellectual property licenses are categorised by the World Intellectual Property Organisation under:

6)    Technology Licensing Agreement:

This license gives the licensee the ability to use the licensor's utility model, patent rights, or know-how that is protected as a trade secret, and therefore in order to use the technology, the licensee is permitted in a more specific way.

7)    Franchise or Trademark Licensing Agreement

The franchiser has normally earned a reputation for his trademark and, through a license agreement, licenses the franchisee to use the trademark, subject to conditions such as ensuring the quality of goods and services because the goodwill of the trademark is involved. The franchisee may provide cash, resources, or personal expertise.

8)    Copyright Licensing Agreement

Creative works, such as music, cinematographic films, artwork, etc., are granted copyrights. To be licensed and published by third parties, they require a copyright license agreement from the licensor, which gives the licensee permission to use the licensor's copyrights.

Legal Provisions for the Licensing Agreements

1.     Licensing under the Copyright Act of 1957

The provision for the licensing given under Chapter VI of the Copyright Act of 1957. Section 30(3) of the act states that- “the copyright owner may grant any interest in his copyright work by a licence in writing signed by him or his agent”. A detailed provision given under the Copyright Act is as follows:

      i.         Compulsory licence in unpublished or published works

Section 31A “Where, in the case of any unpublished work or any work published or communicated to the public and the work is withheld from the public in India, the author is dead or unknown or cannot be traced, or the owner of the copyright in such work cannot be found, any person may apply to the 6[Commercial Court] for a licence to publish or communicate to the public such work or a translation thereof in any language”[3].

     ii.         Compulsory licence for the benefit of the disabled 

Section 31B “Any person working for the benefit of persons with disability on a profit basis or for business may apply to the 14[Commercial Court], in such form and manner and accompanied by such fee as may be prescribed, for a compulsory licence to publish any work in which copyright subsists for the benefit of such persons, in a case to which clause (zb) of sub-section (1) of section 52 does not apply and the 15[Commercial Court] shall dispose of such application as expeditiously as possible and endeavour shall be made to dispose of such application within a period of two months from the date of receipt of the application[4].

   iii.         Statutory Licensing

Section 31C “Any person desirous of making a cover version, being a sound recording in respect of any literary, dramatic or musical work, where sound recordings of that work have been made by or with the licence or consent of the owner of the right in the work, may do so subject to the provisions of this section.[5]”

Section 31D “Any broadcasting organisation desirous of communicating to the public by way of a broadcast or by way of performance of a literary or musical work and sound recording which has already been published may do so subject to the provisions of this section”[6].

   iv.         Licence to produce and publish translations

Section 32(1) “Any person may apply to the 26[Commercial Court] for a licence to produce and publish a translation of a literary or dramatic work in any language after a period of seven years from the first publication of the work”[7].

     v.         Licence to reproduce and publish works for certain purposes   

Section 32A “If, after the passage of relevant time after the publication any literary, scientific or artistic work, the said work is not made available in India or not been on sale in India for six months, any person may apply for a license to publish the work in India”[8].

2.     Licensing under the Trademarks Act of 1999

The act does not mention anything explicitly regarding the registration of a license, but Section 49 refers to the licensee as a registered user[9]. Section 49 of the Trademarks states that- “the registered proprietor and registered user shall apply together via in written agreement to the Registrar in order to seek permission for the use of the registered trademark”.[10]

3.     Licensing under the Designs Act of 1999

Section 30 states that a licence will only be valid if it is in writing and the same shall be registered with the Controller within 6 (six) months from its execution or such further period as may be allowed by the Controller[11]. Firstly, the Licensee must himself register his title in a register by submitting an application to the Controller of Patents, Designs, and Trademarks.[12] Secondly, the rights and obligations embodying the terms and conditions arising from the contractual parties must be in Writing.[13]

4.     Licensing under the Patents Act of 1999

• Must be in writing and duly executed

Section 68 of the Patents Act states that “An assignment of a patent or a share in a patent, a mortgage, licence or the creation of any other interest in a patent shall not be valid unless the same were in writing and the agreement between the parties concerned is reduced to the form of a document embodying all the terms and conditions governing their rights and obligations and duly executed”[14]

• Procedure related to Registration

Section 69 of the Act states that the licensee must register himself through a written application submitted to the Controller General of Patents, Designs and Trademarks.[15]

Section 70 states that- “Subject to the provisions contained in this Act relating to co-ownership of patents and subject also to any rights vested in any other person of which notice is entered in the register, the person or persons registered as grantee or proprietor of a patent shall have power to assign, grant licences under, or otherwise deal with, the patent and to give effectual receipts for any consideration for any such assignment, licence or dealing:

Provided that any equities in respect of the patent may be enforced in like manner as in respect of any other movable property[16].”

Provision for the Compulsory Licensing

According to Section 84 of the Act, “any interested party may apply to the Controller for a compulsory license after three years have passed since the patent was granted because: The patented invention does not operate within Indian territory; the reasonable requirements of the public regarding it have not been met; or the patented invention is not reasonably priced for the public to purchase”[17].

• Special Provision for the Compulsory Licensing

Section 92 states that- “If the Central Government is satisfied, in respect of any patent in force in circumstances of national emergency or circumstances of extreme urgency or in case of public non-commercial use, that compulsory licenses must be granted at any time after the sealing thereof to work the invention, it may make a declaration to that effect, by notification in the Official Gazette, and thereupon the following provisions shall have effect”[18]

In today's world, as rapid, continuous economic development emerges due to innovation and new inventions, the chances of unauthorised use of such rights of the creators and holders have also become a major issue. In order to protect these rights, along with more expansion and better accessibility of innovation, the Licensing of IPR is a key tool or mechanism that enhances the level of protection of such rights vested with an Inventor (Licensor) and another person to whom such rights have been authorised (Licensee) by the Licensor for exploit or use of such licensed product. Many legal frameworks have been introduced by the Government of India since the post-independence era, which we also discussed in the above paragraphs. As the world of global IP regime continuously evolves, the Indian Intellectual Property Law will continue to play a pivotal role in shaping the future economic collaboration, creativity and innovation in the country.

Author:  Apnatva, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

[1]What is Intellectual Property (IP)? (n.d.). About IP. Retrieved April 22, 2025, from https://www.wipo.int/en/web/about-ip

[2] Section 31 & 31A, Copyrights Act, 1957

[3]  Section 31A, Copyrights Act, 1957

[4] Section 31B, Copyrights Act, 1957

[5] Section 31C, Copyrights Act, 1957

[6] Section 31D, Copyright Act, 1957

[7] Section 32, Copyright Act, 1957

[8] Section 32A, Copyrights Act, 1957

[9] Bansal, S. (2012, November 15). Stuti Bansal, Assignment and Licensing of Trademarks in India, Mondaq. Retrieved April 19, 2025, from https://www.mondaq.com/india/trademark/202886/assignment-licensing-of-trademarks-in-india

[10] Section 49, Trademarks Act, 1999

[11] Section 30, the Designs Act, 2000

[12] Section 30(2), the Designs Act, 2000

[13] Section 30(2), the Designs Act, 2000

[14] Section 68, the Patents Act, 1970

[15] Section 69, the Patents Act, 1970

[16] Section 70, the Patents Act, 1970

[17] Section 84, the Patents Act, 1970

[18] Section 92, the Patents Act, 1970