diff --git a/src/main/java/io/github/guacsec/trustifyda/license/LicenseCheck.java b/src/main/java/io/github/guacsec/trustifyda/license/LicenseCheck.java
index 2daed20b..45e4f6b6 100644
--- a/src/main/java/io/github/guacsec/trustifyda/license/LicenseCheck.java
+++ b/src/main/java/io/github/guacsec/trustifyda/license/LicenseCheck.java
@@ -145,12 +145,15 @@ public static CompletableFuture<LicenseSummary> runLicenseCheck(
                   Compatibility status =
                       LicenseUtils.getCompatibility(projectCategory, entry.category());
                   if (status == Compatibility.INCOMPATIBLE) {
+                    String reason =
+                        entry.category() == LicenseCategory.UNKNOWN
+                            ? "License not recognized as a standard SPDX identifier."
+                                + " Manual review recommended to verify compatibility."
+                            : "Dependency license(s) are incompatible with the project"
+                                + " license.";
                     incompatible.add(
                         new IncompatibleDependency(
-                            purl,
-                            entry.licenses(),
-                            entry.category(),
-                            "Dependency license(s) are incompatible with the project license."));
+                            purl, entry.licenses(), entry.category(), reason));
                   }
                 }
 
diff --git a/src/main/java/io/github/guacsec/trustifyda/license/LicenseUtils.java b/src/main/java/io/github/guacsec/trustifyda/license/LicenseUtils.java
index 17bf1d26..a0bb3c7e 100644
--- a/src/main/java/io/github/guacsec/trustifyda/license/LicenseUtils.java
+++ b/src/main/java/io/github/guacsec/trustifyda/license/LicenseUtils.java
@@ -191,10 +191,12 @@ public static Compatibility getCompatibility(
     if (projectCategory == null || dependencyCategory == null) {
       return Compatibility.UNKNOWN;
     }
-    if (projectCategory == LicenseCategory.UNKNOWN
-        || dependencyCategory == LicenseCategory.UNKNOWN) {
+    if (projectCategory == LicenseCategory.UNKNOWN) {
       return Compatibility.UNKNOWN;
     }
+    if (dependencyCategory == LicenseCategory.UNKNOWN) {
+      return Compatibility.INCOMPATIBLE;
+    }
     int projLevel = restrictiveness(projectCategory);
     int depLevel = restrictiveness(dependencyCategory);
 
diff --git a/src/test/java/io/github/guacsec/trustifyda/license/License_Compatibility_Test.java b/src/test/java/io/github/guacsec/trustifyda/license/License_Compatibility_Test.java
new file mode 100644
index 00000000..51d2d241
--- /dev/null
+++ b/src/test/java/io/github/guacsec/trustifyda/license/License_Compatibility_Test.java
@@ -0,0 +1,128 @@
+/*
+ * Copyright 2023-2025 Trustify Dependency Analytics Authors
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *       http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ *
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+package io.github.guacsec.trustifyda.license;
+
+import static org.assertj.core.api.Assertions.assertThat;
+
+import io.github.guacsec.trustifyda.api.v5.LicenseCategory;
+import io.github.guacsec.trustifyda.license.LicenseUtils.Compatibility;
+import java.util.stream.Stream;
+import org.junit.jupiter.api.Nested;
+import org.junit.jupiter.params.ParameterizedTest;
+import org.junit.jupiter.params.provider.Arguments;
+import org.junit.jupiter.params.provider.EnumSource;
+import org.junit.jupiter.params.provider.MethodSource;
+
+/** Tests for {@link LicenseUtils#getCompatibility} with UNKNOWN category handling. */
+class License_Compatibility_Test {
+
+  @Nested
+  class Unknown_Dependency_Category {
+
+    /** Known project + UNKNOWN dependency should be INCOMPATIBLE. */
+    @ParameterizedTest
+    @EnumSource(
+        value = LicenseCategory.class,
+        names = {"PERMISSIVE", "WEAK_COPYLEFT", "STRONG_COPYLEFT"})
+    void known_project_and_unknown_dependency_returns_incompatible(
+        LicenseCategory projectCategory) {
+      // When
+      Compatibility result =
+          LicenseUtils.getCompatibility(projectCategory, LicenseCategory.UNKNOWN);
+
+      // Then
+      assertThat(result).isEqualTo(Compatibility.INCOMPATIBLE);
+    }
+  }
+
+  @Nested
+  class Unknown_Project_Category {
+
+    /** UNKNOWN project category should always return UNKNOWN. */
+    @ParameterizedTest
+    @EnumSource(LicenseCategory.class)
+    void unknown_project_returns_unknown(LicenseCategory dependencyCategory) {
+      // When
+      Compatibility result =
+          LicenseUtils.getCompatibility(LicenseCategory.UNKNOWN, dependencyCategory);
+
+      // Then
+      assertThat(result).isEqualTo(Compatibility.UNKNOWN);
+    }
+
+    /** Null project category should return UNKNOWN. */
+    @ParameterizedTest
+    @EnumSource(LicenseCategory.class)
+    void null_project_returns_unknown(LicenseCategory dependencyCategory) {
+      // When
+      Compatibility result = LicenseUtils.getCompatibility(null, dependencyCategory);
+
+      // Then
+      assertThat(result).isEqualTo(Compatibility.UNKNOWN);
+    }
+  }
+
+  @Nested
+  class Known_Categories {
+
+    /** Existing compatibility logic for known categories remains unchanged. */
+    @ParameterizedTest
+    @MethodSource(
+        "io.github.guacsec.trustifyda.license.License_Compatibility_Test#knownCategoryPairs")
+    void known_categories_preserve_existing_behavior(
+        LicenseCategory project, LicenseCategory dependency, Compatibility expected) {
+      // When
+      Compatibility result = LicenseUtils.getCompatibility(project, dependency);
+
+      // Then
+      assertThat(result).isEqualTo(expected);
+    }
+  }
+
+  static Stream<Arguments> knownCategoryPairs() {
+    return Stream.of(
+        // Same restrictiveness → compatible
+        Arguments.of(
+            LicenseCategory.PERMISSIVE, LicenseCategory.PERMISSIVE, Compatibility.COMPATIBLE),
+        Arguments.of(
+            LicenseCategory.WEAK_COPYLEFT, LicenseCategory.WEAK_COPYLEFT, Compatibility.COMPATIBLE),
+        Arguments.of(
+            LicenseCategory.STRONG_COPYLEFT,
+            LicenseCategory.STRONG_COPYLEFT,
+            Compatibility.COMPATIBLE),
+        // Less restrictive dependency → compatible
+        Arguments.of(
+            LicenseCategory.STRONG_COPYLEFT, LicenseCategory.PERMISSIVE, Compatibility.COMPATIBLE),
+        Arguments.of(
+            LicenseCategory.STRONG_COPYLEFT,
+            LicenseCategory.WEAK_COPYLEFT,
+            Compatibility.COMPATIBLE),
+        Arguments.of(
+            LicenseCategory.WEAK_COPYLEFT, LicenseCategory.PERMISSIVE, Compatibility.COMPATIBLE),
+        // More restrictive dependency → incompatible
+        Arguments.of(
+            LicenseCategory.PERMISSIVE, LicenseCategory.WEAK_COPYLEFT, Compatibility.INCOMPATIBLE),
+        Arguments.of(
+            LicenseCategory.PERMISSIVE,
+            LicenseCategory.STRONG_COPYLEFT,
+            Compatibility.INCOMPATIBLE),
+        Arguments.of(
+            LicenseCategory.WEAK_COPYLEFT,
+            LicenseCategory.STRONG_COPYLEFT,
+            Compatibility.INCOMPATIBLE));
+  }
+}