Patent Licensing

What a patent license is

Patents, like other assets held by companies or individuals, can be subject to sale, inheritance, or rental arrangements.

A patent license is an authorization from a patent holder to another person or entity to use, manufacture, or sell the patented invention or product under specific conditions. The arrangement gives the patent holder a form of control while giving the licensee specific advantages.

A patent license lets the patent holder rent the invention to third parties in exchange for a fee.

Steps for recording a license in the registry:

Application to the patent agent → Legal proceedings → Recording the license in the registry

Patent license agreement

A patent license agreement comes into play when patent use rights are transferred or shared. It creates mutual rights and obligations between the parties.

With a patent license agreement, the licensor takes an important step toward lifting the economic value of the patent by letting others use it. The licensee gains the ability to manufacture or sell the patented product.

The licensing process can vary with the conditions and the agreement between the parties. Setting out the rights and obligations in the agreement carefully and avoiding mistakes is critical. We recommend following the process with an experienced trademark and patent agent.

Patent license agreement template

The parties to a patent license agreement set the terms of the agreement. Notarization of the agreement is not required, but it carries advantages for both sides. Because patent license agreements can shape future business relationships and commercial strategy, both parties benefit from setting their mutual rights and obligations in formal written form.

For the mutual rights and obligations in a patent license agreement to have effect, one of the parties has to file with TÜRKPATENT (the Turkish Patent and Trademark Office) and the agreement has to be recorded in the registry.

Types of patent license agreements

Patent license types are designed around the different purposes and needs of the parties. Different license types can be applied under different conditions based on the patent holder’s strategy and produce different advantages.

1. Simple and exclusive patent license agreements

1. Simple license: a license type where the patent holder gives the right to use the patent to only a specific person or entity. The licensee gets specific rights in the use of the patent, but the patent holder can also grant additional licenses to others on top of the one signed. Under a simple license, the patent holder keeps the right to make further filings or grant further licenses on the same patent.
2. Exclusive license: a license type structured so that the rights of the licensee over the patent are closed off to others. Here, the patent holder grants the right to use the patent only to the single licensee and gives no other party any right over the patent.

The most important difference between the two license types is how use rights are shared. A simple license allows sharing, while an exclusive license restricts it.

2. Voluntary and compulsory patent license agreements

1. Voluntary license: a license type granted at the discretion of the licensor and given by the patent holder under specific terms. Voluntary licenses are typically used to spread commercially useful inventions and grant the licensee specific use rights.
2. Compulsory license: a license type made mandatory by law to ensure the fulfillment of a specific obligation by the patent holder. These arise around important matters like public health, competition conditions, or strategic materials. A compulsory license is granted under specific conditions without the patent holder’s consent, to protect the public interest. It is critical in areas like health products that need to reach many people.

The key difference between voluntary and compulsory licenses is that the first depends entirely on the patent holder’s discretion, while the second is granted under legal obligation. Both license types carry important functions in the nature and operation of the patent system.

Termination of a patent license agreement

A patent license agreement can end on expiry of its term, by mutual agreement between the parties, or through breach.

If the license agreement is for a fixed term, the rights of the parties end when that term expires. At the end of the period, unless one of the parties requests a renewal, the license becomes invalid automatically.

Breach of agreement terms is another ground for termination. If the licensee fails to meet the obligations set out in the agreement, the licensor has the right to terminate. Breach of the rights and obligations in the agreement can harm both parties. Under certain conditions, rescission is possible. The death or insolvency of one of the parties is also a ground for termination.