Grant of patent license: Overview, definition, and example
What is a grant of patent license?
A grant of patent license refers to the permission or authorization given by the owner of a patent (the "licensor") to another party (the "licensee") to use, make, sell, or distribute the patented invention under certain terms and conditions. The license can be exclusive, non-exclusive, or sole, and it specifies the scope of rights granted to the licensee, including the territory and duration of use.
In exchange for the right to use the patented invention, the licensee typically agrees to pay royalties or lump sum payments to the patent holder. A grant of patent license is an agreement that allows others to leverage the patented technology without infringing on the patent holder's rights.
Why is a grant of patent license important?
The grant of a patent license is important because it enables the patent holder to monetize their invention without having to manufacture, sell, or commercialize it themselves. By licensing the patent, the owner can generate revenue through royalties, expand the technology’s reach, and potentially enhance their market position without taking on additional production or operational costs.
For the licensee, a patent license provides access to valuable technology or intellectual property that they can incorporate into their own products or services, gaining a competitive advantage. It also helps to avoid potential patent infringement lawsuits, as the licensee has permission to use the patent.
Understanding the grant of patent license through an example
Imagine a company, Company A, owns a patent for a new type of solar panel technology. Company B, a manufacturer of renewable energy products, is interested in using Company A’s technology to produce solar panels for its own product line. Company A grants Company B a non-exclusive patent license, allowing Company B to use the patented technology within a specific geographic region for a period of five years.
In exchange, Company B agrees to pay Company A a royalty of 5% of the revenue generated from the sales of solar panels that use Company A’s patented technology. The license specifies that Company B is not allowed to sublicense the technology to other companies, and the agreement is limited to the renewable energy industry.
Example of a grant of patent license clause
Here’s how a grant of patent license clause might appear in a licensing agreement:
“The Patent Holder hereby grants to the Licensee a non-exclusive, worldwide license to use, make, sell, and distribute the patented technology described in U.S. Patent No. [Patent Number], for a period of five (5) years. The Licensee agrees to pay the Patent Holder a royalty of 5% of the net revenue derived from the sale of products incorporating the patented technology. This license is granted solely for use in the renewable energy sector and may not be sublicensed without the prior written consent of the Patent Holder.”
Conclusion
The grant of a patent license allows patent holders to leverage their intellectual property by permitting others to use the technology in exchange for compensation. This process provides a way for both parties to benefit: the patent holder generates revenue, while the licensee gains access to valuable technology that can enhance their products or services.
For businesses, understanding the terms and scope of a patent license agreement is crucial for protecting intellectual property rights and maximizing the value derived from innovations. Properly structuring a grant of patent license ensures that both parties' interests are safeguarded and that the technology is used in accordance with the patent holder’s intentions.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.