How to Distinguish a Breach of License Agreement from License Infringement?
Distinguishing a Breach of License Agreement from License Infringement
Disputes often arise when a licensee uses intellectual property beyond the scope granted in a license agreement, such as expanding into new products or territories. Whether that conduct constitutes breach of contract, IP infringement, or both is a critical distinction because available remedies vary significantly.
Why the Distinction Matters — Infringement claims can offer powerful remedies, including statutory damages, treble damages, and recovery of attorney’s fees, depending on the type of IP involved. Breach of contract claims, while sometimes easier to prove, may limit recovery to actual damages, making strategic pleading essential in license disputes.
Key Factors Courts Use to Draw the Line — Courts focus on whether the license is exclusive or non-exclusive and whether the violated provision is a contractual covenant or a condition precedent. Extra-scope use under an exclusive license generally results in breach of contract, while similar conduct under a non-exclusive license may constitute infringement; violations of conditions or scope limitations can support both claims.
Drafting and Litigation Strategy Considerations — Careful license drafting can influence whether future disputes are framed as contract breaches or infringement actions. By anticipating remedies and structuring licenses accordingly, counsel can position clients to maximize protection and recovery if a dispute arises.
For more information, see our blog Breach of License Agreement or License Infringement?
Klemchuk PLLC is a leading IP law firm based in Dallas, Texas, focusing on litigation, anti-counterfeiting, trademarks, patents, and business law. Our experienced attorneys assist clients in safeguarding innovation and expanding market share through strategic investments in intellectual property.
This article is provided for informational purposes only and does not constitute legal advice. For guidance on specific legal matters under federal, state, or local laws, please consult with our IP Lawyers.
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