How to license a patent
Simply owning a patent doesn't necessarily make you rich. To profit from the patent, you must either market the invention, sell your patent or sell the rights to its use.
While selling your patent outright may give you a quick payoff, licensing may typically be a more profitable route for inventors.
How do you license a patent?
By licensing your patent, you keep ownership of your invention, but you give the right to making, using or selling it to someone else. You do this:
- in exchange for royalties
- typically for a set period of time
- under the terms of a licensing agreement
If you own a patent, you can ask the UK Intellectual Property Office to endorse your patent with a licence of right in the register of patents. This means that you agree to licence your patent to anyone who asks. Search for patents with a licence of right.
If you wish to offer your patent to specific individuals or businesses, you could:
- look at manufacturers or potential users of your invention
- attend innovation events or trade shows to promote your product or invention
- advertise your product or patent in industry publications
After you find an interested party, you will usually negotiate any usage rights and royalty payments with the potential licensee as part of your licensing agreement.
What is a patent licensing agreement?
A patent licensing agreement is a legal contract that grants the licensee certain rights regarding the use or sale of your patented invention.
Licensing agreements can be:
- exclusive - giving the licence holder the sole right to exploit the patent
- non-exclusive - where more than one licence holder has the right to exploit the patent
In a typical agreement, you discuss several commercial terms including:
- the subject of agreement - ie a patented process, product or innovation
- the scope of the licence - ie the country or region to which the licence extends
- the royalties - this can be a percentage or fee, fixed or variable
- the duration of the licence - including renewal or early termination terms
- any limitations - eg minimum annual royalty or number of products sold
- obligations and warranties - including responsibility and associated costs of protection renewal, maintaining and enforcing patent rights, etc
Other considerations may include: product or quality control standards, the ability for the licensee to sub-license the rights, any costs in addition to royalties (eg signing costs), compliance with regulations, etc.
Importance of legal advice
If you want to license a patent, it often helps to discuss your options with an intellectual property (IP) adviser or a patent attorney. They can help advise you on contractual matters and help you agree on licensing terms with a potential licensee.
- find a patent attorney near you
- get help from Invest NI's IP advisers
- find licensing or IP consultants in Britain and Ireland
- seek help from international licensing practitioners
If you are looking to license someone else's IP, see buying and licensing other people's patents.