As patent owner you will want to gain financial benefits
from your invention. In order to achieve this, you will
often require the assistance of other companies or entities
that will market or manufacture your invention. In short,
for full commercialisation of the invention the patent owner
often needs to enter into license agreements.
What is the license agreement?
It is the permission by the patent owner given to another
party which becomes the licensee to use the invention or
intellectual property in return for compensation. The compensation
can take the form of royalties payable to the original patentee,
or it can take the form of a sale of rights. The second
option transfers the rights of ownership to the person or
entity that purchased rights of usage. The original patentee
will thus not be eligible for compensation in terms of royalties
afterwards.
The licensor retains the rights to ownership if the first
option is followed, but has the benefit that the costs involved
in further enhancement and commercialisation of the invention
are carried by the licensee.
The agreement stipulates:
Length of the agreement
Geographical boundaries which may be applicable
Payment method and due dates
Whether the agreement includes the right to improvements
Whether sub-licensing will be permitted and what
the implications will be.
The agreement must include all relevant terms and conditions
of use. As such, it must be comprehensive enough to prevent
any misunderstandings and subsequent legal costs incurred
for litigation.
If you are a patent owner who wants to fully commercialise
your invention through another entity, contact Smit &
Van Wyk via their website for assistance in setting up a license agreement.
