United States
“Attempts to reach a licence agreement verbally will do nothing but
frustrate those who do so.”
entire country or group of countries, or only a portion
of a country. A licensor must be careful to limit the
licensed territory to that geographical area in which the
licensee has, or will have, strength in commercialising
the invention.
Rights granted
A party that has been granted rights under a patent has
been granted a privilege to infringe that patent. For this
reason, a licensee’s rights will be very specifically and
carefully defined within the licence agreement.
An important consideration will be whether the licensee
will have the right to grant sublicences. Another very
meaningful consideration will be whether the licensor will
be granting exclusive licence rights versus non-exclusive
rights.
Field of use
Patent licences are usually granted for a specific field of
use. This may include, for example, online versus brick and
mortar marketing of the licensed products.
Minimum royalties
It would be foolhardy for a licensor granting an exclusive
licence not to provide for minimum royalties. Minimums
will urge licensees to commercialise the licensed products
aggressively.
Third party infringement
As described in the November/December 2019 edition of
World Intellectual Property Review, there may be instances
where a licensee’s commercialisation of licensed products
will cause a patent infringement claim against it by a third
party patent holder.
The licence agreement should contain provision for
the defence against such a claim, including who will be
responsible for such a defence.
Infringement by third parties
Unrelated to third party infringement claims, there may
be instances where a third party’s conduct will constitute
infringement of the licensed patent(s). There will need to be
an understanding regarding which party will have financial
responsibility for prosecuting a claim against the infringer.
Summary
The foregoing exemplary factors are presented in an
effort to give the reader an appreciation of the meticulous
thought required on the part of each party to a patent
licence agreement. Seasoned experienced patent counsel
will prove invaluable. n
Paul J. Sutton is a founding partner of IP boutique law
firm Sutton Magidoff and is adjunct professor at NYU’s
Tandon School of Engineering. He can be contacted at:
paul@suttonmagidoff.com
www.worldipreview.com IP Pages 2020 123