Implied licence

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​What it is

An implied licence grants a person (the licensee) permission to use another person’s copyrighted material. As the name suggests, an implied licence is not granted in a formal written document but is implied, often through the conduct of the parties.

Put another way: through their actions, a copyright owner may grant another person the right to use their work.

When it applies

An implied licence arises when a copyright owner (the licensor) has not given written permission to a third party (the licensee) to use their copyrighted work, but the circumstances are such that they are deemed to have given implied consent.

The existence and scope of an implied licence is ordinarily derived from the parties’ conduct and what was reasonably intended by them at the time the licence was deemed to have been given. This could be prior dealings, verbal discussions or email exchanges - all of which could span an extended period of time. Relevant conduct does not need to be, and rarely is, limited to a single interaction.

It could also be that the nature of the transaction itself implies consent. For example, the sale of a pattern to make clothes would likely include an implied licence for the buyer to make clothes for themselves and their family, but not to do so commercially.

Who/what it applies to

An implied licence binds the copyright owner (licensor) and the party using the work (licensee).

The terms of the licence will allow the licensee the right to use the licensor’s copyrighted work, together with other rights and obligations that can be reasonably implied e.g. the term (or duration) of the licence. However, any such terms will be interpreted as narrowly as possible (see key legal considerations).

Core principles

1. An implied licence is not in writing but arises through conduct, custom or law (see key legal considerations).
2. The licensee is granted permission to use the copyrighted work - the licensor retains ownership of the copyrighted material (contrast a copyright assignment).
3. Given the impact on the licensor’s copyright, an implied licence will arise only when necessary and the scope will be construed narrowly – granting no more than is needed to give effect to the parties’ intentions.
4. In implying a licence, the court will have regard to the parties’ intention at the time the licence was granted, without regard to the benefit of hindsight.
5. An implied licence can be used to fill the gaps of a written contract or can exist independently - without any written agreement at all.

Why it matters (risks/opportunities)

Risks

• An implied licence is unwritten and has an inherent risk of uncertainty as to its terms.
• Implied licences are often context specific. This is necessarily subjective, which can lead to genuinely held, but different, understandings that can damage commercial relationships and potentially result in a legal dispute. 
• As licences can be implied through conduct, copyright owners need to be vigilant to avoid the unintentional grant of a licence.

Opportunities

Implied licences:

• are a flexible, cost-effective way to manage the use of copyrighted works
• allow access to a wider audience in circumstances where the copyright owner’s conduct suggests they are happy to agree to the relevant use e.g. as they have not sought to restrict use of the work
• generally grant a narrow use of the work, helping to protect the copyright owner’s rights in that work  

Key legal considerations/elements

The circumstances in which a licence may be implied include: 

Conduct of the parties (consent)

An implied licence will most commonly arise from the parties’ conduct or, if being implied into a contract, from the words of the contract itself. In essence, the conduct of the copyright owner is deemed to provide consent to the use of their work.

Common usage (custom)

A licence can be implied from a common practice within a community (e.g. a trade or profession), provided that community is representative of the copyright owner. For example, the customs of digital artists will bind the copyright owner if they too are a digital artist. However, these circumstances are increasingly rare and the court will likely require significant evidence to accept a usage or custom argument.

Matter of law (policy)

A term can be implied as a matter of law to achieve a particular policy objective e.g. contracts for the sale of goods have an implied term that the seller is entitled to sell the goods.

Key commercial considerations/elements

If you're aware of someone using your work without permission, put them on formal notice that permission has not been given (knowledge and silence can give rise to a reasonable implication being found).

When negotiating a transaction, keep evidence of the communications with your counterpart so you can document your understanding of any licence e.g. emails, notes of conversations and dates of when the work was used.

If you're dealing with a party you have issued a licence to before, be clear from the outset if you intend to engage on different terms (e.g. to avoid a course of dealing argument that prior terms should apply).

If possible, mark any deliverables as ‘subject to contract’ until such time as the terms have been agreed.

Entering into a formal contract, which clearly sets out all terms between the parties, is the best way to avoid the risks of uncertainty that arise with an implied licence.

FAQs

What rights can an implied licence relate to?

The licence can give permission to use any of the economic rights granted by copyright (moral rights cannot be licenced but they can be waived). For example, it can permit someone to reproduce, distribute or perform the work.

What terms can be implied?

Any terms can be implied (albeit narrowly) that can be deduced from the parties’ conduct. These could relate to the duration of the licence, provisions as to royalties and whether the licence is granted on an exclusive, or non-exclusive, basis.

Can I revoke (terminate) an implied licence?

It depends on the nature of the licence granted. If the licence was given for consideration e.g. if the recipient (licensee) paid for the use of the work, the licence might not be revocable. If however no payment was made, the licence simply allowed the licensee to use the work (what is known as a ‘bare’ licence) then it may be revocable on reasonable notice. What is reasonable will depend on the facts of any given case.

Can someone use an implied licence to improve upon a transaction that they have already agreed to?

No. The court will only imply terms that give effect to the intention of the parties at the time the licence was deemed to have been granted. It will not remedy or ‘improve’ an agreement that has subsequently proven to be unfavourable to one party.  

What does the court look at when deciding whether to grant a licence?

When determining the scope of an implied licence, the courts will have regard to a range of factors including the nature of the relationship between the parties and the subject matter of the transaction.