Licensing your patent

Licensing your patent

Contents

A licence is a contractual agreement under which, while still owning a patent, the owner allows someone else the right to use or sell the patented product or process. Licences can be given in return for a payment/royalty payments.

A licence can be very useful if the owner does not have the knowledge or resources to manufacture and market their idea themselves.

The licence document should set out the terms and conditions that apply to using the patent, including any payment or royalties to be made by the person using the patent ('the licensee') to the owner ('the licensor') in return for using the owner's rights. The licence should also show the geographical area and field of use in which a licensee may sell the product and how long the licence will last.

There are several different types of licences:

  • Exclusive – a single licensee has the right to use the patent
  • Sole – a single licensee and the patent owner have the right to use the patent
  • Non-exclusive – several licensees may have the right to use the patent

Once a licence has been agreed, the licensor or the licensee must tell the IPO as soon as possible so it can record the licence agreement on the Register of Patents. Form 21 will need to be filed and the appropriate fee paid, stating what kind of licence has been granted. As long as the patent owner signs the form, the IPO will not need any supporting documents as evidence of the transaction.

Licences of Right

A patent owner can apply to the IPO using form 28 for an entry to be placed on the Register of Patents that licences under their patent are available as 'of right'. This means the patent owner cannot refuse to license the invention.

After endorsing the patent 'Licences of Right', any renewal fees are half the normal rate, so the patent owner can keep costs down while they try to benefit from their patent. An owner can later cancel the Licences of Right endorsement using form 30, but they will then be required to pay the balance of the renewal fees which they would have paid if they had not asked for the endorsement.