What does "licensing a patent" entail, and why is it done?

A patent license is an agreement that enables an individual to use their invention commercially. To use your intellectual property commercially to earn money, you have to get the patent licensed first and foremost. The validity of your license can be only for a certain period. Those who own the invention are licensors whereas those who receive the license are known as licensees. Therefore, licensing a patent indicates that those who own the patent get the right to permit an individual or an organization to use their invention and pay money in return for it.

As far as the payment structure is concerned, it is something that depends on the type of terms and conditions. Apart from this the licensors also get the right to grant permission to use innovations to third-party for multiple reasons. Sometimes, patent owners are not able to spend on manufacturing facilities to harness the advantages of their invention. In this case, they enable others to use their invention that has the required facilities. And the patent owners get the royalty payment in return for this.

In other cases, where patent owners have manufacturing facilities, but they are not able to cater to the growing demand. So, in this case, they can grant the license of their invention to others and can demand royalty from them. Apart from this, patent owners have all required manufacturing facilities to manufacture the products, but they wish to focus on a particular geographical location. So, they can choose to grant a license to other organizations to focus on other geographical locations.

A license agreement with other organizations is the right way to establish a mutually beneficial relationship with them. Granting license to others not only lets licensors continue their earnings but also help them continue to get the right over their property.

Consult the IPExcel team for queries like who can apply for a patent.



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Anand is a Technology Analyst with 15+ years of experience in the Technology & Patent Domain. Over the years, he has gained immense hands-on experience in consulting Technologists & In-house R&D Teams of Fortune 50 organizations for developing, protecting & licensing innovative proprietary technologies. He has worked onsite/offsite extensively with global teams of attorneys, technologist & business leaders across many jurisdictions such as US, Europe, Canada, China, South Korea, Singapore & Middle East. He holds Masters(Integrated) in Chemistry & Ph.D. in Materials Science both from Indian Institute of Technology(IIT), Kanpur, India.

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