A Patent License Agreement grants rights to use, manufacture, or sell an invention covered by a patent. This playbook focuses on negotiating royalty structures, field-of-use restrictions, and ownership of improvements.
Why This Matters: Ambiguous grant language can lead to unauthorized use or unintended limitations, increasing litigation risk and operational obstacles.
Negotiation strategy
If you're the Licensor:
Ensure the license grant is clear and includes all necessary limitations such as territory and term. Retain rights not expressly granted to maintain flexibility.
If you're the Licensee:
Negotiate for broad rights to use the licensed patents, including sublicensing rights, to maximize business opportunities.
Essential elements
1
Grant of Rights
Defines scope of license.
2
Territory
Geographic scope of rights.
3
Term
Duration of the license.
Action framework
ACCEPT
Propose edits if the clause lacks clarity on scope or limitations.
EDIT
Reject if the clause imposes unreasonable restrictions or lacks essential elements.
ADD
Add if the clause is missing or lacks key elements like territory or term.
PRO TIP
Always cross-check the license grant with business objectives to ensure alignment.
Example clauses
FAVORABLE
Comprehensive License Grant
"The Licensor hereby grants to the Licensee a non-exclusive, non-transferable, royalty-bearing license to use, reproduce, and distribute the Licensed Patents solely within the Territory and during the Term specified herein."
NEUTRAL
Basic License Grant
"The Licensor grants a license to the Licensee, subject to the terms and conditions of this Agreement."
UNFAVORABLE
"The Licensor grants rights to the Licensee without specifying scope or limitations."
High-Risk Projects
Fallbacks
International Expansion
For international expansion, ensure the territory is clearly defined to include all target markets.
Joint Ventures
In joint ventures, consider co-licensing arrangements to facilitate shared use of licensed patents.
Licensing & IP Playbook Template (Pro both parties)
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