Patent License and Analysis

A patentee being the owner of the patent has the monopoly rights to exclude others from selling, using, making or importing of the patented product. By licensing, a patent owner allows others to use, make, sell his patented product on certain terms and conditions and in exchange gets the monetary benefits in the form of royalty/money. A patent owner can earn the profits by commercializing his patent in the form of assignments, licenses and mortgages. The benefit of the licensing of a patent resides in the fact that the patentee does not loose the ownership of the patent. Being an owner of the patent, a patentee can anytime terminate the license on the breach of contract. The Indian Patent Act provides certain essential features of a license agreement which are as follows:

Application of Patent valuation

• A License agreement should be made on a stamp paper and appropriate stamp duty should be paid.
• The document registered is effective from the date of its execution and not from the date of its registration.
• If the patentee/licensee requests, then the term and condition of the licenses can be kept confidential by the Controller.
• The terms and conditions of the license agreement should be stated clearly.

Advantages of licensing of a patent

• It acts as a cost effective way to enter market.
• Licensing of a patent helps in sharing the risk of manufacturing and selling of invention.
• Through patent licensing cross-licensing and technology transfer is possible.
• Patent licensing helps in reducing the research and development cost.
• Licensing of a patent helps in utilization of the invention properly.

Patent License Agreement

A patent license agreement is an agreement between two parties i.e. patentee (licensor) and licensee who is authorized to use the rights given in exchange of fee or royalty.A patent license agreement can be an "exclusive license agreement" or "non exclusive license agreement" or a "compulsory license" which is mostly granted by Government under section 84 of the Indian Patent Act,1970. Section 2(f) of the Indian Patent Act, 1970 defines an exclusive license. Exclusive license excludes all others including the patentee from using the invention. An exclusive license can be further limited to territory, time etc.