The term license comes from the Latin word license that means “to be permitted.” The permission concept is central to licensing that permits someone else as its owner to use the technology, product, or designs. The owner might want to use both products and also wants to protect the owner. The patent licensing agreement fulfills both the requirements. A licensing agreement is one of the best alternatives for the sale or the purchasing agreement. During the sale, the owner transfers the legal proprietorship of the product to the buyer.
During licensing circumstances, the inventor will retain the product ownership and derive a high benefit range, a continuous stream of revenue, and the capacity to offer maintenance and support services to the entire licensee. The ability to share the IPRs or Intellectual Property rights created by the licensee through the licensed use of the product is one of the advantages that might arise from the relationship of licensing.
Patent licensing can also be a strategic division; for instance, an organization might be enriched with the IP or intellectual property but might not include the resources for manufacturing the product based on it. Optionally the company might not include the marketing ability of the product. Finally, the company might identify the product as the best selling product of the products produced by another enterprise. It allows the other company to market and manufacture the costs of the company and allows vital access to a significant share of the market.
The patent license protects the ownership of the IP in the product. The licensee also contains an explicit assertion of the ownership of the IP and will also carefully define the inventor’s scope for the right to use the product. Commercially, a licensee is a sort of contractual relationship that balances the ability of the licensor to derive all the benefit through product exploitation with the ability to protect IP ownership.
Importance of Patent Licensing
There are innumerable arrangements for patent licensing like outsourcing arrangements, pharmaceutical licensing, software and biotechnology licenses, and end-user license agreements. The agreement for the licensing through invalidity search varies widely based on the commercial terms. For instance, the telecom company licenses its product to the customers will include a standard form agreement consisting of contractual protections for the inventor, contracting with the customers numbering in thousands. There might be different contractual terms contained in a license where an IP organization gets into contracts with a few enterprises across the globe, providing every company exclusively with the company’s specific territory.
Different types of contracts differ radically in terms. A SaaS term for the license of the company varies significantly from the pharmaceutical company to enter into the Research and Development department. It is unexpected as the different terms reflect the various commercial transactions that you might achieve through licensing. But some contractual components are very commonly present in licensing. It goes back to the license, the central purpose of being protected. Each of the licenses should always include two different types of protection, which are:
The primary target of the licensee is to protect the IP ownership of the inventor. The license will oblige the licensee to make a contractual payment to the owner. The benefit might be financial or non-financial. The license occurs as a collaboration agreement part between two companies sharing the IP to produce a better product. The advantages might expose the inventor product to the clients, dependent on the enhancing brand profile. Whatever be the nature of the benefits, you have to do thorough research of the patent search websites before applying for the patent application. In the application, you should explain the right of the inventor that will give them contractual benefits. The failure on the part of the licensee provides a benefit to the inventor to sue them in the case of infringement or for breaching the contract.
The liability protection offers a scope for the licensor to limit the licensee liability. It also prevents the end-users for a specific type of breach committed due to the licensor. Now you might wonder why an inventor will allow limiting the product liability. Firstly, it will allow the inventor to commercially accept that if the product fails to perform well in the market, the inventor should not be responsible for the repayment of the licensee’s initial sums. This also includes the cost of replacing the product with the cost of the inventor for every possible consequence of the product failure.
The costs might be the total amount of the financial sum that is not proportionate due to the inventor’s payment amount originally. As a commercial principle standard, the licensor can place a financial cap on the liability not restricted by the law. It includes personal injury or death liability caused due to the negligence of the inventor. Secondly, the most obvious reason for restricting the liability of the inventor is in the interest of the inventor to do so. If each of the inventors starts claiming for the patent successfully, then there will be a huge bill. The inventor can also enhance the liability limit in every license, thus lowering the overall size cost. Therefore, the Google patents advanced search can offer enough protection to the inventor by controlling the liability and the scope of the owner.
Any patent invention that will lead to the product’s production will allow the company to use IP consisting of the patent. For protecting the IP, the IP owner will impose several restrictions on the scope of use of the IP by the manufacturer. Thus the inventor needs to carefully draft the license, thus allowing the manufacturer to make the product, implementing the design or technology.