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Licensing Agreements

How to License a Patent?

In Sydney, Australia, your business can utilise the services of a Patent Attorney in Sydney or Commercial Law Firm to help and assist you license your patents and inventions. These professionals can draft and negotiate licensing agreements and contracts with other businesses who are interested in using your technology or commercialise your products.

A license agreement is typically an agreement between two parties: the licensor (owner of the patents) and licensee (the person who wants to use the patents). The license agreement gives consent or permission to the licensee for them to act as if they were the owner of the patents in a limited sense.

You can license a patent on an exclusive basis which means the license excludes all others from using the licensed technology. For example, the owner of the patents cannot use their own invention or sell additional licenses where they have agreed to an exclusive license. Exclusive licenses are attractive to licensee wanted to block new competitors in a marketplace.

A second type of license is called a non-exclusive license. A non-exclusive license allows the owner of the technology to issue multiple licenses to as many people as they would like. This type of license usually benefits the patent owner. Licensee’s are sometimes reluctant to sign these licenses where new competitors could be also licensed and allowed to operate. The benefits for the owner are that they are essentially double dipped on the license fees or royalties.

It is important to note that license fees for non-exclusive license are generally cheaper than exclusive licenses. However it depends a lot on industry norms as to whether a potential licensee will sign for a non-exclusive or exclusive license.

Another important aspect is the topic of royalties. Royalties are the amount of money that is paid to the patent owner in exchange for the licence. There are no rules for what is an adequate payment of a royalty. The actual amount depends on the respective power in the negotiation of both parties, also whether the technology is of minor or major importance to the licensee, and whether there are alternative technologies which are cheap. Also, royalties payments need to consider whether the technology is the entire product or part of the product which greatly reduces the quanta of the royalty.

Another aspect of royalty negotiation is whether the technology is a turnkey solution or blue sky research. The greater the level of development that has gone into the technology, the greater the royalty payment will be.