What happens to sub-licenses when master licenses are terminated?

Asked over 1 year ago - New York, NY

Company A operates in the USA (Wichita, Kansas) and sells a master license to John for all of Canada with rights to sub-license smaller territories to others. Paul purchases a sub-license from John for a specific territory.

Company A decides to cancel master license to John.

What happens to Paul's sub-license since it was signed under John but with the rights to do so and approved by Company A?

Is Paul's sub-license null and void or does Company A assume the sub-license contract? Can company A void the contract but still enforce certain clauses which are to Company A's benefits?

Attorney answers (1)

  1. Michael Anthony DiNardo

    Contributor Level 11


    Lawyer agrees

    Answered . Are you a law student with a question you need to answer for class? This is causing flashbacks to contracts and copyright classes.
    This is a very fact specific issue and would need to be looked at by an attorney. It likely depends upon the terms of the specific master license and sub-license. In general, if the licensee in a master license has the right to sub-license his/her rights the sub-license would terminate upon termination of the master license. There may be provisions providing for either automatic termination or survival of the sub-license in the event the master license is terminated. If the sub-license survives termination, the original licensor would likely step into the shoes of the sub-licensor.
    They may also be some issues with the sub-licensee being a known and acknowledged third-party beneficiary of the master license and having some argument to maintain the sub-license. Again, there are likely terms in the master license and/or sub-license agreements that address this situation.

    Disclaimer: This answer does not constitute legal advice and does not create an attorney-client relationship. You... more

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