Types of Patent Licensing in Indian Law

Patent right provides the exclusive rights to the Patentee to stop others from making, using, or selling the patented product or process. But what if another person also wants to make or use the same invention? Here comes the role of Patent Licensing.

Bringing a patent into the market for selling purposes is not easy for everyone. It needs to understand that one patent can help you to grow your business if you know how to use that patent for your business. Because filing a patent application and then launching such a patent in the market involve lots of steps. Avoid such steps, the patentee can do the licensing of the patent and still enjoy the rights over his invention.

What is Licensing of a patent?

As we know that patent is a right provided by the government to the owner of the patent. With the help of this right, the owner excludes others from making, using, or selling the same product in the market. But here comes the role of the license of the patent.

Licensing of the patent is a legal licencing agreement between the patent holder and another party to use such patented invention for a specific purpose and certain period. The patent holder becomes the licensor, and the other party will become the licensee.

Licensing of a patent allows the owner of the patent to monetize his Intellectual Property rights while the licensee makes, uses, or sells such invention in the market with the help of agreement between both parties.

Conditions related to Licensing

The agreement between licensor and licensee may contain some mandatory and optional conditions in which:

Mandatory conditions

Conditions which are essential to the agreement must be written while agreeing to the parties. These conditions can be related to the royalty percentage of the patent, duration to pay the royalty or duration or territory of the license.

Optional conditions

Those conditions which are not mandatory for the agreement, but the parties have added such conditions to make their agreement more flexible come under optional conditions. These conditions may include sub-licensing or dispute resolution mechanisms such as Arbitration or mediation etc. 

Types of Patent Licensing

There are several types of licensing of patents in India. You can choose your type of patent licensing based on the requirements and needs of the market.

Exclusive License of Patent

An exclusive license of the patent is a license given by the patent holder to the other party where the patent holder transfers his title and all rights to the other party. After taking the exclusive license, the licensee can use this patent as this invention belongs to him. In this case, the licensor loses his all rights related to that patent for a specific period. It means that after giving the exclusive license, even the patent holder cannot use, make or sell that patented invention.

There is only one condition attached to an exclusive license the licensee of the patent cannot give the license to any other party. For example, A got the patent for a Mobile phone, and he gave the exclusive license to B. Now, B cannot further give any kind of license to C.

Non-Exclusive Licensing

In non-exclusive licensing, the patent holder can distribute the licence to more than one party to use the patented technology within a geographical area or for a specified period. In this type of licensing, the patent holder can also make, use, or sell the patented invention.

The licensor can use a non-exclusive license if he thinks that he cannot fulfil the needs of the public alone or if he wants to maximize the commercialization potential of his invention. For example, A got the patent for a Mobile phone, and he gave the non-exclusive license to B and C. Now B, C and A can make, use or sell the same product in the market separately.

Sub-Licensing

In this type of licensing, the licensee of a patent has the right to issue the same license to other parties. With the help of this, he can fulfil the market needs on a big scale by taking the help of this new party. For example, A got the patent for a Mobile phone, and he gave the license to B allowing him that he can further give the license to other parties. Now, B can further give the license to C to make, use, or sell the product or process.

Sole Licensing

It is almost same as the exclusive licensing because the licensee can use the rights over such patented invention for a specified time and the licensor cannot provide the same license to others during this time, but the licensor retains the right to use the same technology for his use. For example, A got the patent for a Mobile phone, and he gave the exclusive license to B. Now, A cannot sell the same mobile phone in the market, but he can use the same technology for himself.

Cross-Licensing

When two parties exchange the licenses with each other is called cross-licensing. This license helps both parties to use the patented technology and avoid the dispute of potential infringement between the parties. This type of license is common in industries where multiple patented inventions may overlap with each other or sometimes, collaboration becomes necessary to develop the product or process. For example, if A got the patent for a Mobile phone, and B Made the phone cover for the same model, now they both can take the cross-licensing to avoid a dispute.

Compulsory Licensing

Compulsory Licensing is a legal part of the patent in which the patent office grants the license to third parties to make, use or sell the patented product or process without the consent of the patent holder. You can read the full article on Compulsory Licensing.

FAQs

What are the benefits of patent licensing?

Patent licensing allows the inventor to generate money from his invention without making the effort to manufacture or market his product.

Can patent licensing agreements be customized to meet specific needs?

Yes, patent licensing agreements can be customized to meet the needs of the parties involved. License agreements typically include provisions regarding the scope of the license, duration, royalties, sublicensing rights, and dispute resolution mechanisms and these all terms and conditions can be customised with the consent of both parties.

What are the risks associated with patent licensing?

One of the main risks associated with patent licensing is the potential for disputes between the licensor and licensee over the interpretation of the licensing agreement. That is why it is always suggested that you should take the help of an advocate or a patent agent while framing the patent licensing agreement.

Conclusion

Licensing of a patent is a tool for the patent holder to generate money without doing anything for its commercialization. He can assign his rights to make, use, or sell the patented product or process and in return take the royalties over the sale.

Both parties can choose several types of patent licensing as per the conditions and requirements. In today’s time, there are many instances of Infringement of patents. The licensing can become a tool to avoid potential infringement and both parties can work together to develop the invention.

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