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: Broad or unlimited scope can dilute the asset’s value and erode competitive advantages, while overly narrow restrictions can hamper revenue opportunities.
Negotiation strategy
If you're the Licensor:
Ensure the scope is clearly defined to protect the IP's value. Limit sublicensing rights to prevent dilution of control.
If you're the Licensee:
Negotiate for broad usage rights to maximize revenue opportunities. Seek flexibility in sublicensing to expand market reach.
Essential elements
1
Field of Use
Defines specific usage areas.
2
Sublicensing Rights
Conditions for granting sublicenses.
3
Sub-license Approval
Approval process for sublicenses.
Action framework
ACCEPT
Propose edits if the scope is too restrictive or broad, ensuring alignment with business goals.
EDIT
Reject if the clause severely limits business operations or potential revenue streams.
ADD
Add language to clarify sublicensing terms or field of use if missing.
PRO TIP
Always align scope restrictions with strategic business objectives to maintain competitive advantage.
Example clauses
FAVORABLE
Preferred Field of Use
"The Licensee shall use the Licensed IP solely within the Field of Use, which is defined as [insert specific field or industry]. Any use of the Licensed IP outside the Field of Use shall constitute a material breach of this Agreement."
NEUTRAL
Standard Sublicensing Clause
"The Licensee may sublicense the IP under terms consistent with this Agreement."
UNFAVORABLE
"The Licensee may use the Licensed IP in any manner without restriction."
High-Risk Projects
Fallbacks
Emerging Markets
In emerging markets, consider broader scope to capture new opportunities while maintaining essential protections.
Joint Ventures
In joint ventures, balance scope to allow collaboration while safeguarding proprietary technology.
Licensing & IP Playbook Template (Pro both parties)
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