Patent Licensing

What is Patent Licensing?

It is an act or a process where a patent is granted to a third party by the patent owner, allowing them to extract benefits by selling and using the licensed product. The patent owner gives this license for an amount fixed as royalty. The patent license is given to the third party (Licensee) by the patent owner (Licensor) for a fixed period of time over a mutual agreement. For the patent license agreement to be valid, it must be in writing.

Types of Patent Licensing

1.Exclusive License: All the rights of the licensor are transferred to the licensee except the right to transfer the patent to another person. Since the licensee has a monopoly over the market, the chances of the patent getting infringed are minimal.

2.Non-exclusive license: Here the licensee has the right to make and sell the patented invention but that right is not exclusive. In simple words, the patent owner can grant permission to many licensors who may make or sell the same patented invention.

3.Sub-license: The licensee grants certain licensed rights to a third party to make the product.

4.Cross License: When an organization requires the support of some other party to make a product, then they enter into a cross-license agreement. In this type, the licenses are exchanged between parties for mutual benefit. For example, Ericsson and Oppo entered into a cross-license agreement that covered the patent portfolios of both companies.

5.Compulsory License: These types of licenses are usually granted by the government, to make, use or sell the patented product to third parties for the greater good of the public. More commonly seen in cases of pharmaceutical products

Benefits of Patent Licensing

1.ow risk: Production and manufacturing of a product is no easy task, to reduce this risk patent owners license their products to third parties.

2.Easy access to global markets: A patent owner may find it difficult to mass-produce their invention, thus when the owner licenses a product to different organizations in different countries, they get access to such markets leading to the globalization of their invention.

3.Edge over competitors: If the patent owner licenses the product to an established organization with a large customer base then it becomes easier to market the patent, giving it a competitive advantage.


1.Finding the right licensee for a particular invention is a difficult task. Thus, it is important to find the right licensee and have a defined agreement in place.

2.The patent owner loses control over his invention over the period of the license.

3.The patent owner is dependent on the abilities and proficiency of the licensee and if the licensee fails to commercialize the patent properly then the owner suffers.