Patent Licensing: What You Need to Know
Patenting is about creating Intellectual Property assets. Like any other asset, IP assets can be sold, leased, rented – or, in proper form – licensed.
One of the possible goals of the patenting process is the licensing of the patent. A patent license is an agreement between the patent owner and a licensee to transfer rights associated with the patent. This allows the patent owner to monetize the IP, usually for an amount of pre-determined royalties or in exchange for other benefits.
Licensing a patent can also be a mutual agreement between an individual or company/companies which the IP owner has chosen to produce, use or sell a product for them. In this case, the patent holder retains ownership over the invention while also collecting royalties.
Why License Your Patent?
Many inventors are reluctant to engage in the manufacturing and marketing process. For them, the best part about inventing is just that – inventing. This is what they are good at and they want to focus on it. For these inventors, one of the options is to reach out to third parties and license the invention to them and later to collect royalties from the sale of their product/design. There are more reasons as to why an inventor may seek to license their patent.
Avoids Patent Infringement: In case certain products may infringe on a patent, the product owner may seek a license from the patent owner. Such a license will provide the product owner with, well, a license – in exchange for something of value to the patent owner.
Low Risk: The manufacturing of products can be very costly and can have a lot of risks attached. Licensing takes the risk off of the licensor and puts it on a much more financially able company or individual, providing for economies of scale.
Product is Launched Quickly: Launching a product is a very large investment. Aside from a large amount of money it will require, it will also require the building of a name in the market. By licensing out your product to an established licensee, your product will launch to the market and gain traction much quicker.
Foreign Distribution: Distributing to a domestic market is hard enough, especially for a single inventor. However, licensing your product to a licensor who has a global presence can also give your product global outreach which will help it soar much quicker.
Licensing Can be Temporary: With licensing, you do not have to permanently give your lP rights away. Instead, a license can be limited by time, geography, milestones, conditions – or anything the patent owner and the licensee agreed upon!
We invite you to get in touch with us if you have any questions about Patent Licensing. And if you are in need of other patent services, you can call us to talk about things like Patent Portfolio Management, Medical Device Patent, Intellectual Property Rights Due Diligence, and more.
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