Patent licensing is a practice in which the patent owner permits other firms/entities to use the patent. Licensing patents to others includes legal work mainly in the form of agreement. The license agreement has terms and conditions that both parties need to follow. The agreement contains a description of the product, shares in profit, and the purpose of license, payment method, and other details. Let’s take a look at complete information regarding patent licensing
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How to carry out patent licensing?
There are two types of approaches in the industry:
- Carrot Approach: This is quite an informal approach or a sales approach. In this, the patent owner contacts a potential licensee. Potential licensee may deny using the product. The patent owner aims to convince the potential buyer about how the patent will benefit them and make a profit.
- Stick approach: It’s a strict approach. In this case, A party is using the patent without permission and is already guilty of infringement. The patent owner contacts the users with two options- either faces a lawsuit or license the patent.
According to IP paralegals, Litigation is an integral part when licensing patents. However, in carrot approach doesn’t express it strongly while it is a strict statement in the stick approach.
Patent Licensing classification
There are two types of patent licenses- Exclusive and Non-exclusive.
- Exclusive License: As the word suggests, Only one licensee receives the benefit as per the agreement. However, the patent owner will still hold ownership.
- Non-Exclusive License: In this license, More than one licensee can make a profit from the patent. Patent owners also produce; sell the product in partnership with others.
Difference: Patent transfer and licensing patents
In the case of patent transfer, complete ownership goes to the new buyer. This mostly happens while mergers, demergers, bankruptcy, takeover, etc. On the contrary, patent licensing doesn’t shift ownership of the patent. Reasons for patent licensing can be a patent owner’s lack of infrastructure or plans to expand business in other terrains.
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Reason to opt for patent licensing
Most of the investors don’t have the resources to turn their patent in a product. The best way is to share the rights of the patent and build a mutually beneficial system. In this way, the patent can reach more people while you receive royalties and profits.
Reason to not opt for patent licensing
Every investor has different intentions. One must not think about licensing patents if these patents are part of a business strategy. Some inventors believe only they can develop the product to full potential and put it to better use.
Moreover, finding a great partner is also tough. Most inventors are not good at negotiation terms and condition; these agreements might not allow the owner to make great profits.
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The litigation process is complex and tough. It demands a lot of attention to detail. Thorough knowledge of terms and vast experience is essential. To be safe, go for professional services like Patent Paralegal Force.
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