The owner of a patent can decide not to exploit his invention himself but to have it exploited by a third party. This is called licensing the patent.
What is a license agreement?
A patent (or trademark) license agreement is a contract by which the owner of the industrial property title authorizes a third party, the licensee, to exploit the title in exchange for a royalty. In this sense, the license agreement is similar to a lease of a property such as a house or an apartment for example.
Why make a license agreement?
Since the license granted may cover several aspects of the patent, it is important to draft an agreement delimiting the scope of the license granted. A patent license agreement must take into account:
- The object of the license: what it will take into account, whether it is a patent or a trademark only or a combination of both.
- The exclusivity or non-exclusivity of the license: an exclusive license will allow the holder to license his title to only one licensee, the non-exclusive license will allow the holder to license his title to several licensees
- Royalties: this fee is mandatory but its amount and terms of payment can be arranged, for example, the amount may be flat or proportional
- The geographical limit: on which territory the license will be effective, it can be for all the countries where the title exists or only some
- The transmission of know-how: if the license concerns a patent, it may require the disclosure to the licensee of know-how not protected by the title, a confidentiality clause is recommended to protect this know-how
The license agreement is a good tool for the exploitation of your title if it is properly drafted and if it best frames your expectations and requirements regarding the license. YesMyPatent’s team will assist you in your licensing projects to draft your contract.