Patent Licensing: All You Need To Know


Inventors work hard day in and day out for years or even decades to give shape to their ideas. They then take up the arduous task of filing a patent for their inventions. Granting a patent for an invention is a way of recognizing the hard work. The true reward lies when the invention is put to good use. Not all inventors have the financial background or support to give life to their inventions on a large scale.

Patent licensing is a boon to inventors to see their inventions become popular and gain a gigantic form.

The crux of Patent Licensing

Patent licensing refers to the act in which the patent owner (i.e. licensor) gives rights to a third party (i.e. licensee) to design, manufacture, use, sell, and market the patented invention. Licensing an invention is mutually beneficial to the licensee and the patent owner. A patent licensing agreement is signed between both the parties for a period transferring the rights over the intellectual property for that particular period.

Licensing ensures your patent generates perpetual revenue often paying back, the time and money spent on the invention.

Classification of Patent Licenses

Exclusive License

In an exclusive license, the patent owner holds to the title of patent and transfers all other rights to the licensee. The licensee can enjoy all rights over the invention except the right to transfer the patent. The right to patent transfer remains with the owner. Exclusive license patents have a lower risk of infringement as the complete rights are offered to a single licensee.

Non-exclusive License

When the patent owner grants rights to the patent to more than one licensee, it is known as a non-exclusive license. In this case, all licensees will have the right to produce, sell or use the patented product.

Compulsory License

This license usually comes to play when the Government of a country transfers the right to manufacture a product irrespective of the interest of the patent owner. Section 84 of the Indian Patents Act, 1970 has a list of the products for which compulsory license can be applied. This license is mostly issued for pharmaceutical products to make them affordable and easily accessible to the public. The first compulsory license in India was granted to Natco Pharma Ltd., for the cancer medication, Nexavar. The drug was originally patented by Bayer Corporation.


In a sub-license, the licensee has the power to transfer the right to manufacture the product or any other particular licensed right of the patent to other different companies.


Cross-license offers the exchange of licenses between different organizations to bring the product to market. This license comes handy when the invention requires support from other products to make it complete and enhance its utility. For example, Ericsson and Oppo signed a cross-license agreement to share their patent portfolios.

Voluntary License

The patent owner can grant rights to manufacture or sell his products to the licensee on a goodwill basis. The licensee will act as an agent of the patent owner and help in the production, sale, and distribution of the product. This would lead to a reduction in the price of the products.

Benefits of Patent Licensing

Monetary Benefits

The inventor can enjoy a royalty amount for transferring the patent rights. The standard average royalties for inventions range from 2 – 20% of the net revenues generated by the patent.

Risk-Free Measure

The manufacturing and marketing of the patented technology on a large scale involves various risk factors. Licensing of a patented technology reduces such risks and makes the patent owner free of liabilities.

Global Reach of the Product

Licensing the invention to the right licensee with the international supply chain will aid in bulk production and distribution of the product worldwide.

License period

Licensing a patented technology is much better than selling the patent. The licensee will enjoy the rights to the patent until the duration of the patent license agreement. The owner will regain the rights after the license expires.

Competitive Edge

The owner is free to issue a license to an organized firm who can launch and take the product to great levels. This will give the product an easy reach and a better position among already existing similar products in the market.

Steps to Land on the Best Patent License Agreement

Showcasing the patented technology

The inventor looking for a licensee should bring out a clear-cut picture in a glimpse of what the company would achieve on getting the license to the product. Apt delivery of the product potential is bound to bring in many interested companies.

Approach Patent Licensing Companies

The patent owner can approach reputed patent licensing firms to match them with the right licensee. These firms have adequate knowledge on Intellectual Property Rights, patent licensing attorneys and experts from related technology who can guide the inventor in landing the correct Patent licensing Agreement.

In-depth Market Research

Having a good market idea on the product, similar products in the market and giant firms involved in the manufacture of such products will guide you in reaching the right licensee.


Bringing out the patented technology in trade shows, conferences, and patent databases can attract potential licensees.

Patent Licensing is a risk-free alluring opportunity for the inventor to enjoy the fruits of his hard-earned patented technology. Assign the best patent licensing companies and rest assured your patent gets the right licensee.