IP license grants
a temporary permission
to manufacture, use, or sell
any given invention,
or any part of it,
without the transfer
FAQ Licensing Your Invention
...major licensing considerations
What is the difference between patent license and patent assignment?
The primary purpose of an assignment is to effectively transfer the ownership of an invention between various parties. An assignment may transfer ownership in an existing patent, provisional patent application, regular patent applications, and even reissue application. This transfer of ownership could be complete or partial. Since the law requires all patent applications to be filed in the name of the true inventor, employed inventors are the most common assignors, usually providing a full ownership transfer to their employers. Licenses, on the other hand, are utilized by inventors that want to give another party a permission to manufacture and sell their invention, without transfer of ownership. As such, they could be viewed as leasing agreements. Accordingly, licenses are typically temporary in nature, and could provide the rights to fully exploit the invention, or only some limited aspect of it.
Do I need an attorney to license my invention?
As with any business contractual agreement, attorney's help is not mandatory, but highly recommended. A license agreement may contain an overwhelming amount of legal considerations. In fact, many of those considerations may appear to be trivial and unnecessary, but in reality, they are an indispensible component of a properly formulated legal document. In addition, many companies want inventors they do business with to be represented by attorneys. Legal representation places both parties on an equal plane during the license negotiations. Moreover, in case of later legal dispute between the parties, legal representation during the original negotiations is viewed positively by the courts.
What should a license agreement incude?
There are hundreds of legal considerations that may be incorporated in license agreements. Some of the basics include a summary of the parties involved, the actual license grant provision, and the recital of the purpose behind the transactions. A license should contain an explicit schedule of any royalty payments, and specify the duration of the agreement including any desirable options and extensions. Also, a license may include the rights to further transfer, specifically, the rights of a person that received a license from you to license your invention to yet another person or entity. Another common consideration is the exclusivity clause, which in essence, contains an inventor's promise to license his/her invention to a single entity. All things considered, there should be no doubt that a license agreement must be tailored to a specific invention, but equally important is the fact that a license should be prepared with future goals in mind, and if necessary vigorously negotiated.
What are the common pitfalls of patent licensing?
The most common pitfall of the licensing process is self-representation. It's important to remember that the inventive process differs significantly from the licensing process. As a result, many inventors fail to represent themselves adequately during the license agreement negotiations. The shortfalls of self-representation are exacerbated by the fact that may corporations insist on tailor-made licenses designed to protect their interest.
What is a resonable licensing fee?
A list of factors impacting the royalty rates varies from invention to invention. The royalty rate will increase for inventions that have limited competition, could be sold at lower prices and generate large volumes of sales. The volume of sales in not the consideration, in fact, an invention with low volume of sales but high profit margins will generate the same return on investment. Be that as it may, historically royalty rates have been hovering between 1% to 5%, however, it is not unusual for royalty rates to reach 20% of the retail price for commercial software.