Patent License Agreements
If you have patented an invention but lack the resources to produce and market it, you will need to license it to someone else in order to make money. This will require you to negotiate and draft a patent license agreement that allows someone else the limited right to use your invention and profit from it. A good patent license agreement addresses a number of issues.
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Subject Matter
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At the very least, a patent license agreement should specify the patent number and type (utility patent, for example) of the patent that is being licensed. If you do not wish to license all of your patented technology, you should specifically identify which technology you are licensing.
Scope of License
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The agreement should state whether it is exclusive or non-exclusive. If you wish to reserve the right to license the same technology to others, then the license should be identified as non-exclusive. You may also wish to limit the purpose of the licensee's use of your technology (for manufacturing or marketing only, for example).
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Identity of Licensee
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It is likely that your licensee will be a corporate entity. The agreement should specify whether the license extends to parent companies, subsidiaries and affiliated companies. If you wish to extend the license to affiliate companies, the agreement should specify what shareholding percentage a parent company must hold in the primary licensee in order to be entitled to use the license, and whether branch offices may use the license.
Territory
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Most patent license agreements allow the licensee to use the patent in all countries that have granted patent protection to the invention. Nevertheless, you may wish to exclude countries that have a reputation for weak intellectual property protection. In any case, you should specifically mention each country rather than simply stating that the licensee may use the patent in all countries that offer patent protection to the invention.
Remuneration
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Several different remuneration schemes are available to the licensor. Some agreements specify a one-time lump sum payment. Other schemes include an up-front bonus plus a percentage of revenues attributable to the licensor (known as "royalties"), and periodic royalty payments with no bonus. If royalty payments are selected, it is important to specify how licensee revenues are to be calculated--whether or not the licensee may deduct taxes, discounts or charge-backs from revenues before calculating royalties, for example.
Duration
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In most patent license agreements, the duration of the agreement is identical to the duration of patent protection plus any patent extensions. If you are granting an exclusive license, however, you may wish to limit the duration in case the company proves unable to effectively market your invention.
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References
Resources
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