diff --git a/src/license/index.js b/src/license/index.js
index 112ae842..1b934fbe 100644
--- a/src/license/index.js
+++ b/src/license/index.js
@@ -95,11 +95,14 @@ export async function runLicenseCheck(sbomContent, manifestPath, url, opts = {},
 
 		const status = getCompatibility(projectCategory, entry.category);
 		if (status === 'incompatible') {
+			const reason = entry.category?.toUpperCase() === 'UNKNOWN'
+				? 'License not recognized as a standard SPDX identifier. Manual review recommended to verify compatibility.'
+				: 'Dependency license(s) are incompatible with the project license.';
 			incompatibleDependencies.push({
 				purl,
 				licenses: entry.licenses,
 				category: entry.category,
-				reason: 'Dependency license(s) are incompatible with the project license.'
+				reason
 			});
 		}
 	}
diff --git a/src/license/license_utils.js b/src/license/license_utils.js
index 4e845a00..86bedf3a 100644
--- a/src/license/license_utils.js
+++ b/src/license/license_utils.js
@@ -102,10 +102,14 @@ export function getCompatibility(projectCategory, dependencyCategory) {
 	const proj = projectCategory.toUpperCase();
 	const dep = dependencyCategory.toUpperCase();
 
-	if (proj === 'UNKNOWN' || dep === 'UNKNOWN') {
+	if (proj === 'UNKNOWN') {
 		return 'unknown';
 	}
 
+	if (dep === 'UNKNOWN') {
+		return 'incompatible';
+	}
+
 	const restrictiveness = {
 		'PERMISSIVE': 1,
 		'WEAK_COPYLEFT': 2,
diff --git a/test/providers/license.test.js b/test/providers/license.test.js
index 9a075c69..c8390403 100644
--- a/test/providers/license.test.js
+++ b/test/providers/license.test.js
@@ -11,6 +11,7 @@ import Javascript_pnpm from '../../src/providers/javascript_pnpm.js'
 import Javascript_yarn from '../../src/providers/javascript_yarn.js'
 import pythonPipProvider from '../../src/providers/python_pip.js'
 import rustCargoProvider from '../../src/providers/rust_cargo.js'
+import { getCompatibility } from '../../src/license/license_utils.js'
 import { normalizeLicensesResponse } from '../../src/license/licenses_api.js'
 
 suite('normalizeLicensesResponse', () => {
@@ -62,6 +63,39 @@ suite('normalizeLicensesResponse', () => {
 	})
 })
 
+suite('getCompatibility with UNKNOWN category', () => {
+	/** @type {Array<{proj: string, dep: string, expected: string}>} */
+	const cases = [
+		{ proj: 'PERMISSIVE', dep: 'UNKNOWN', expected: 'incompatible' },
+		{ proj: 'WEAK_COPYLEFT', dep: 'UNKNOWN', expected: 'incompatible' },
+		{ proj: 'STRONG_COPYLEFT', dep: 'UNKNOWN', expected: 'incompatible' },
+		{ proj: 'UNKNOWN', dep: 'PERMISSIVE', expected: 'unknown' },
+		{ proj: 'UNKNOWN', dep: 'UNKNOWN', expected: 'unknown' },
+	];
+
+	cases.forEach(({ proj, dep, expected }) => {
+		/// Verifies getCompatibility returns the expected result for the given project/dependency category pair.
+		test(`getCompatibility('${proj}', '${dep}') returns '${expected}'`, () => {
+			expect(getCompatibility(proj, dep)).to.equal(expected);
+		});
+	});
+
+	/// Verifies that a null project category with UNKNOWN dependency returns 'unknown'.
+	test("getCompatibility(null, 'UNKNOWN') returns 'unknown'", () => {
+		expect(getCompatibility(null, 'UNKNOWN')).to.equal('unknown');
+	});
+
+	/// Verifies that existing known-category incompatibility checks still work correctly.
+	test("existing incompatibility check: STRONG_COPYLEFT dep vs PERMISSIVE proj returns 'incompatible'", () => {
+		expect(getCompatibility('PERMISSIVE', 'STRONG_COPYLEFT')).to.equal('incompatible');
+	});
+
+	/// Verifies that compatible known-category checks are unaffected.
+	test("existing compatibility check: PERMISSIVE dep vs STRONG_COPYLEFT proj returns 'compatible'", () => {
+		expect(getCompatibility('STRONG_COPYLEFT', 'PERMISSIVE')).to.equal('compatible');
+	});
+});
+
 suite('testing readLicenseFromManifest with existing test manifests', () => {
 
 	suite('Java Maven provider', () => {