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Patent licensing

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Patent licensing

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Patent licensing

  1. 1. By Ethunandhan S 5th year, B.Com.;LL.B(Hons.) SASTRA University, Thanjavur
  2. 2. Patent is an exclusive right granted for an invention, which is either a product or a process, and offers a new way of doing a work or provides with a new technical solution to an existing problem
  3. 3. Patent Licensing is an act of or a process of granting, to a third party, permissions to extricate benefits by selling and using the licensed product. The patent owner gives license to a third person to use, sell and extract benefits from his patented invention, for an amount already decided as royalty.
  4. 4.  As per Section 68 of the Patent Act, 1970, for a patent license to be valid, the agreement must be in writing.  In PVR Pictures Ltd. v. Studio - (2009) 41 PTC 70] case, Delhi HC held that term sheet agreement (Term Sheet is the initial basis for a license the intellectual property rights specified below, and sets forth the primary licensing terms as agreed upon by the undersigned parties) shall not amount to a license agreement.
  5. 5. TRANSFER OF RISKS - Manufacturing and production of a design or products have a lot many risks involved. With patent licensing the patent owner can transfer such risks involved in production of patent design or product to the licensee. GLOBAL MARKET - It becomes difficult for many companies to have a mass production of a product individually. Patent licensing comes to an aid to overcome this difficulty as it permits other organizations to produce the patent products and thereby help in mass production. Patent licensing thus can help in introducing ones invention in the global market.
  6. 6. LIMITED PERIOD - Because patent licensing is done for a limited period, the owner gets back his exclusive rights over his invention as and when the license duration expires. COMPETITIVE ADVANTAGE - If the patent is licensed to an already established organisation with a large customer base, the patent product will have a larger market to capture in comparison to other patents, giving it a competitive edge over other patents.
  7. 7. DIFFICULTY IN DETERMINING LICENSEE – It takes lots of efforts and time to determine the appropriate licensee for the invention. It is essential to get a potential licensee and have a structured agreement in order to have the greatest chances of success. LOSS OF CONTROL - For the period of license, the patent owner transfers his rights to the licensee. Result of which is he loses his own control, either partially or fully, on his own invention.
  8. 8. RISK OF LICENSEE'S ABILITY - The patent owner relies on the efficiency and abilities of the licensee to effectively commercialize the patent product. The risk of poor strategy and quality management can adversely affect the patent reputation and success.
  9. 9. EXCLUSIVE LICENSE An exclusive license is one in which all the rights of the patent is transferred to the licensee, except the title. In such case, the licensee has all the rights as of the patent owner except of transferring the patent to another person. In this type of license, the chances of the patent getting infringed is minimal as the rights are less being exploited and the licensee has the monopoly over the market.
  10. 10. NON-EXCLUSIVE LICENSE In a non-exclusive right, the licensee has the right to sell and make the patented design, but such right is not exclusive. Patent owner may grant permission to use and make such patented design to any other person also. In this case, all of them have the right to make, use and sell the patented design. The rights enshrined by this license is not exclusive to a particular licensee. SUB-LICENSE It is a type if license issued by the licensee to different organizations to make the products. Sublicense can be said to be granting of certain licensed rights on a product to a third party by the licensee.
  11. 11. CROSS LICENSE When a product requires support of some other product to make its place in the market and for better utilization, cross license is preferred. Cross license can be understood as exchange of license between different organizations and individuals. Recently, Ericsson and Oppo entered into a cross license agreement between them covering various patent portfolios of both the companies including portfolios of 2G, 3G and 4G.
  12. 12. COMPULSORY LICENSE When the government grants permission to any individuals or organizations to use, sell or make a patented design or product, irrespective of the will of the patent owner, for the public good, it is referred to as compulsory license. Compulsory license is usually seen being granted in the pharmaceutical products and the products which fulfils the criteria as mentioned in Section 84 (a failure to meet reasonable public requirements; the inaccessibility of the patented invention at a reasonably affordable price to the public; (or) the non-working of the patented invention in India) of the Patents Act, 1970. The first compulsory license, in India, was given to Natco Pharma Ltd. for producing generic version of Nexavar which was a patented medicine of Bayer Corporation, on March 9, 2012.

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